Question : The marginal propensity to consume (MPC) is 0.9. If disposable income increases by INR 2,000, what will be the increase in consumption?
Option 1: INR 1,800
Option 2: INR 1,600
Option 3: INR 2,000
Option 4: INR 2,200
Correct Answer: INR 1,800
Solution : The correct answer is (A) INR 1,800
The marginal propensity to consume (MPC) represents the change in consumption resulting from a change in disposable income. In this case, the MPC is given as 0.9.
To calculate the increase in consumption resulting from a change in disposable income, we can multiply the change in disposable income by the MPC.
Given: MPC = 0.9
Change in disposable income = INR 2,000
Increase in consumption = MPC * Change in disposable income
Increase in consumption = 0.9 * 2000
Increase in consumption = 1800
Therefore, the increase in consumption is INR 1,800.
Question : The average propensity to consume (APC) is 0.6. If disposable income is INR 5,000, what is the level of consumption?
Question : The marginal propensity to consume (MPC) is defined as the:
Question : The consumption function is given by C = 600 + 0.8Y. If disposable income is INR 3,000, what is the level of consumption?
Question : The average propensity to consume (APC) is 0.75. If disposable income is INR 6,000, what is the level of consumption?
Question : The marginal propensity to consume (MPC) is 0.8. If there is an autonomous increase in investment spending of INR 1,500, what will be the change in equilibrium income?
Regular exam updates, QnA, Predictors, College Applications & E-books now on your Mobile