ACHIEVERS VILLA

+2 ECONOMICS AD and AS Practical ASSIGNMENT

Q1. Suppose in a hypothetical economy, the income rises from 5,000 crore to 6,000 crore, As a result, the consumption
expenditure rises from R4,000 crore to R4,600 crore. Marginal propensity to consume in such a case would be..
Q2. If marginal propensity to save is 20% and is constant at all levels of income the autonomous consumption is *100 crore,
construct consumption function of the given hypothetical economy.
Q3. If marginal propensity to save is 10% and is constant at all levels of income, and the autonomous consumption is 200
crore, construct consumption function of the given hypothetical economy.
Q4. If marginal propensity to consume is 80% and is constant at all levels of income, and the autonomous consumption is 400
crore, construct consumption function of the given hypothetical economy.
a5. The consumption function of an economy is: C = 40 +0.8Y (amount in R crore). Determine that level of income where
average propensity to consume will be one.
Q6. Suppose in a hypothetical economy, the income rises from 500 crore to R 600 crore. As a result, the Consumption
expenditure rises from400 crore to 500 crore. Marginal propensityto consume in such a case would be... **se*se se****

Q7. If the value of average propensity to consume (APC) is 0.8 and national income is 4,000 crore, the value of savings will
08.
be. If income
* *rises from 50,000 to t 60,00, consumption increases from40,000 to 48,000. In this situation, what will be

the value of marginal propensity to consume (MPC)?

09. If the value of average propensity to save (APS) is 0.2 and national income is 4,000 crore, then consumption will
Oe...************
a10. Find the saving function when consumption functlon is given as C= 1,000 + 0.6Y.
a11. Calculate marginal propensitytoconsume and marginal propensityto savefrom the following data:
Income Consumption

2,000 300
4,000 1,300
012. If national income is 100 crore and consumption expenditure R90 crore, find out average propensity to save. When
income rises to R 120 crore and consumption expenditure to R 108 crore, what will be the marginal propensity to consume and
marginal propensity to save?
Q13. Estimate the value of ex-ante AD, when autonomous investment and consumption expenditure (A) is R 50 crore, and MPS
is 0.2 and level of income is R 300 crore.
Q14. Estimate the value of aggregate demand in an economy of:
(a) Autonomous investment (I)= R 100 crore.
(b) Marginal propensity to save (MPS) = 0.2.
(c) Level of income (Y) =R4,000 crore.
(d) Autonomous consumption expenditure ( C )=R50 Crore
Q15. Completethe following table: to MarginalPropensity
Level of Income Consumption Expenditure Marginal Propensity
Consume to Save
(R) ()
400 240
500 320
600 395
465
700
Q16. In an economy, the equilibrium level of income is 900 and the autonomous saving is -100. If marginal propensity to save is
or False? Justify your answer.
0.3, consumption expenditure in this economy will be 500. True
Q17. Derive a straight line saving curve using the following consumption function: C = 20 +0.6Y Presuming the income levels to
be R 100, R 200 and R 300 crore. Also calculate that level of income where consumption is equal to income.

Q18. Complete the following table: Marginal Propensity to Save Average Propensity to Save
Income Consumption

0 40
50 70
100 100
120
150
Q19. Complete the following table: to Average Propensity to Save
Income Saving Marginal Propensity
Consume

BY KRISHAN MAHAJAN (DIRECTOR-ACHIEVERS VILLA) M-7986541817

 20 -12
40 6
60
30 5

Q20. Complete the following table:

Income Average Propensity to Save
Marginal Propensity to Saving
Consume
-110
100 0.6
200 0.6
300 0.6

Q21. Complete the following table:

Income
Saving Average Propensity to Marginal Propensity
Consume Consume
-45
50
-30
100 -15
150

Q22. If in an economy Change in initial investments

of the following:
(41) =
T 500 crore. Marginal propensity to save (MPS) =
0.2. Find the values

(a) Investment multiplier (K).

(b) Change in final income (AY).
023.If in an economy Change in initial investments
of the following:
(A1) =
R 700 crore. Marginal Propensity to save (MPS) =
0.2. Find the values

(a) Investment mi K.
(b) Change in final income (AY).
Q24. If in an economy Change in initial investment
(Al) =
R1,200 crore. Marginal propensity to save (MPS) =
0.2. Find the values
of:
(a) Investment multiplier (K).
(b) Change in final income (4Y).
025. Calculate change in final income, if marginal
crore.
propensity to consume (MPC) is 0.8 and change in initial investment is R1,000
Q26. Estimate the change in initial investment if
marginal propensity to save (MPS) is 0.10 and change in final income is
15,000 crore.
Q27. Estimate the change in final income if
marginal propensity to consume (MPC) is 0.75 and change in initial investment is
2,000 crore.
a28. Discuss briefly the relationship between marginal propensity to save and investment multiplier, using hypothetical
numerical example.
029. The saving function of an economy is given as: S -25 +0.25. If the
=
planned investment is R200 crore, calculate the
following:
() Equilibrium level of income in the economy.
(ii) Aggregate demand at income of R500 crore.
Q30. The saving function of an economy is given as: S= (-) 10 +0.20Y.
If the ex-ante investments are 240 crore, calculate the
following:
(i) Equilibrium level of income in the economy.
(i) Additional investments which will be needed to double the present level of equilibrium income.
031. The saving function of an economy is given as: S = (-) 50 +0.10Y. If the ex-ante investments are R450 crore, calculate the
following
(i) Equilibrium level of income in the economy.
(i) Additional investments which will be needed to gain an additional income level of 3,000 crore.
Q32. In an economy, if initial investments are increased by 100 crore, discuss the working of investment. Multiplier presuming
marginal propensity to consume is 0.8.
033. If in an economy Change in initial investment (41) = R 1,000 crore. Marginal propensity to save (MPS) = 0.2. Find the value
of the following:
(a) Investment multiplier (K).
(b) Change in final income (Ar).
Q34. If in an economy Marginal propensity to save (MPS) = 0.2. Change in initial investment (Al) = T 2,000 crore. Find the value
of the following:
a) Investment multiplier (K).
(b) Final change in income (4Y).
Q35. If in an economy Marginal propensity to consume (MPC) = 0.8. Change in initial investment (Al) R4,000 crore. Find the
value of:
(a) Investment multiplier (K).

BY KRISHAN MAHAJAN (DIRECTOR-ACHIEVERS VILLA) M-7986541817

 (b) Change in final income (AY).
Q36. Answer the
following questions based on the data given below:
(i) Planned
investment
(a) Determine the
R 100
crore. (ii) C 50 +0.5Y
(6)
equilibrium level of income.
Calculate the
saving and
Q37. Answer the consumption expenditure at equilibrium level of national income.
following questions based on the data given below:
() Planned level of investment R
200 crore. (i)
=

(a) Determine the equilibrium level of C=100+0.8Y

income.
(6) Calculate the saving and
038. consumption expenditure at equilibrium level of income.
Answer the following questions based on the data given below: (i) Planned investment R200 crore.
(a) Determine the equilibrium level of income.
=
(ii) C= 50+0.8Y
(6) Calculate the saving and
Q39. On the consumption expenditure at equilibrium level at income.
basis of following
formation, identify whether the economy is in equilibrium or not:
Particulars
(i) Autonomous consumption and investment
(i) Marginal propensity to save (MPS) expenditure (A) 500 crore
0.20
ii) National income
Q40. Given the 4,000 crore
following information, identify whether the economy is in equilibrium or not.
Particulars
(i) Autonomous consumption and investment
(ii) Marginal propensity to consume (MPC)
expenditure ( 200 crore
0.70
(ii) National income
Q41. Given the following information, state whether the T1,000 crore
economy is in equilibrium or not.
Particularss
i) Autonomous consumption and investment
(i) Marginal Propensity to
expenditure ( 700 crore
consume (MPC) 0.80
(ii) National income
Q42. If marginal propensity to save (MPS) is 0.2 and 4,000 crore
initial change in investment is 250 crore, than the final
Change in income would be.... ****

(a) 1,000 crore (b) R 1,200 crore

(c) 500 crore (d) 3,500 crore
Q43. Answer the following questions based on the data
given below:
(i) Planned investments = R100 crore
(i) C = 50 +0.50Y
(a) Determine the equilibrium level of income.
(b) Calculate the value of savings at equilibrium level of national income.
(c) Calculate the value of investment multiplier.
Q44. Measure the levl of ex-ante aggregate demand when
autonomous investment and
crore,and MPS is 0.2 and level of income (Y) is R4,000 crore. State whether consumption Expenditure (C) is 50
Q45. Find the value of multiplier, when economy is in equilibrium or not (cite reasons).
() MPC 0.75.
(ii) MPS 0.
(i) MPC= 0.9.
Q46. If investment multiplier is 3, what will be the value of
marginal propensity to consume?
Q47. How much additional income will be generated in an
economy with additional investment
of R100 crore, when MPC %
Q48. A R 2 crore increase in investment leads to a rise in national income by 1,000 crore. Find out marginal propensity to
Consume.
Q49. It is planned to make a new investment of 1,400 crore in the economy. How much will be the
income if marginal propensity to save is 0.4? Calculate. increase in national
Q50. As a result of an increase in investment by R 100 crore, national income
rises by 400 crore. Calculate marginal
to consume. propensity
Q51. In an economy., investment expenditure is increased
by 700 crore. The marginal propensity to consume is 0.8. Calculate
the total increase in income and
consumption expenditure.
Q52. In an economy, investment expenditure is increased
by 400 crore marginal propensity to consume is 0.6. Calculate the
total increase in income and saving.
Q53 An increase in investment by R 400 crore leads to increase in
national income by 1,600 crore. Calculate marginal
propensity to consume and marginal propensity to save.
Q54. In an economy, the equilibrium level of income is 15,000 crore. The ratio of
marginal propensity to save is 3:1. Calculate the additional investment needed to reach amarginal propensity to and
new equilibrium level ofconsume
income of
22,000 crore.
Q55. In an economy, an increase in investment leads to 3-time increase in national income.
Calculate marginal Propensity to
consume.
Q56. In an economy, an increase in investment leads to
increase in national income which is three times more than the increase
in investment. Calculate marginal propensity to consume.

BY KRISHAN MAHAJAN
(DIRECTOR-ACHIEVERS VILLA) M-7986541817
 of income
to save is 0.3. It the equilibrIum
the marginal propensity
I n an economy the autonomous investment is 360 and
is 1,400, then the autonomous consumption is 40. True or False? Justify your answer.
Qs8. Find consumption expenditure from the following
National income = T 1,500.
Autonomous consumption = R 175.
Marginal propensity to consume = 0.75.
Q59. Find investment expenditure from the following:
National income = 800.
Autonomous consumption = R 200.
Marginal propensity to consume = 0.7.
Q60. Find national income from the following:
Autonomous consumption = R 20o.
Marginal propensity to consume = 0.8.
Investmentexpenditure R100.
6.An economy is in equilibrium. The economy's consumption function is C = 200 +0.7Y where C is consumption expenditure
and Y is national income. National income is R1,500. Find out investment expenditure in the economy.
Q62. An economy is in equilibrium. Find autonomous
consumption expenditure.
National income 1,600.
Investment expenditure = 300.
Marginal propensity to consume = 0.8.
Q63. In an economy C=50 +0.5Y is the consumption function (where C = consumption expenditure and Y = National income)
and investment expenditure is R 6,000. Calculate:
(6) Equilibrium level of national income.
(i) Saving at equilibrium level of national income.
Q64. The saving function of an economy is S =
-250+0.35Y. The economy is in equilibrium when income is equal to R 5,000.
Calculate:
() Investment expenditure at equilibrium level of income.
(ii) Autonomous consumption.
Q65. In an economy, the saving function is S = -600 +0.2Y where S is saving and Y is income. Calculate the equilibrium level of
income and consumption expenditure when investment
expenditure is T800.
Q66. In an economy, the consumption is C 900 +0.6Y where
C is
consumption expenditure
=
and Y is income.Calculate
equilibrium level of income and saving when investment expenditure is 7,000.
Q67. The saving function of an economy is S -200+0.2Y. The
economy is in equilibrium when income is equal to R 2,000.
Calculate
i) Investment expenditure at equilibrium level of income.
(ii) Autonomous consumption.
(ii) Investment multiplier.
Q68. From the following information about an economy, calculate (i) its equilibrium level of national income, and
(i) saving at equilibrium level of national income.
Consumption function: C= 200 +0.9Y (where C= consumption expenditure and Y= national income).
Investmentexpenditure: I= 3,000.
Q69. C 100+0.75Y is a consumption function (where C = consumption expenditure and Y = national income) and Investment
expenditure is 800. On the basis of this information calculate:
(i) Equilibrium level of national income.
(i) Saving at equilibrium level of national income.
a70. If in an economy saving function is given by S (-) 50 +0.2Y and Y = R 2,000 crore; consumption expenditure for the
economy would be R 1,650 crore and the autonomous investment is R 50 crore and the marginal propensity to consume is 0.8.
True or False? Justify your answer with proper calculations.
Q71. If in an economy:
a) Consumption function isgiven by C = 100+0.75Y, and
(b) Autonomous investment is 150 crore.
Estimate (i) equilibrium level of income, (ii) consumption and savings at the equilibrium level of income.
Q72. Calculate multiplier when MPC is % and %.From the calculations establish the relation between size of multiplier and size
of MPC.
Q73. In an economy C 200+0.5Y is the consumption function where C is the consumption expenditure and Y is the national
income. Iinvestment expenditure is 400 crore. Is the economy in equilibrium at an income level t 1,500 crore? Justify your
answer.

Q74. Calculate the value of marginal propensity to consume (MPC), if in an economy, autonomous
consumption isR 500 crore,
exante investments are 4,000 crore and equilibrium level of income of the economy is 18,000crore
075. Supposein a hypothetical economy, the savings increased by 20 crore when national income increases by 100 crore.
Compute the additional investments needed to attain an increase in national income by 6,000 crore?
076. In an economy C= 200+0.5Y is the consumption function where Cis the consumption expenditure and Y is the national
income. Investment expenditure is 400 crore. Is the economy in equilibrium at an income level 1,500 crore? Justify your
answer

BY KRISHAN MAHAJAN (DIRECTOR-ACHIEVERS VILLA) M-7986541817

 AD A
+2 ECONOMICS ANSWER SHEET (ASSIGNMENT)
Ans.1. (d) 0.6 Ans.30. (i) Equilibrium level of income
Ans.2. C 100+0.8Y in the economy = 1,250 crore
investments needed to double
Ans.3. C 200+0.9Y (ii) Additional
income
Ans.4. C 400+0.8Y the present level of equilibrium
Ans.5. Y = 40 200
R250 crore
Ans.31. (i) Equilibrium level of income
0.2
Ans.6. (c) 1.0 in the economy =5,000 crore

(i) Additional investments needed to gain

Ans.7. (c) 800 crore
an additional income level of 3,000 crore
Ans.8. (a) 0.80
Ans.9. (c) 3,200 crore
300 crore
Ans.10. S = -1,000+0.4Y
Ans.32. AY =R 500 Crore

Ans.11. MPC = 0.5 Ans.33. (a) Investment multiplier =5

(b) Change in final income R5,000
-

MPS 0.5
5
Ans.34. (a) Investment multiplier
=

Ans.12. APS = 0.1

R 10,000 crore
(b) Change in final income
=

MPC 0.9 =5
Ans.35. (a) Investment multiplier
MPS 0.1 R 20,000 crore
income
(b) Change in final
=

Ans.13. AD =R 290 crore

income R 300 crore
Ans.36. (a) Equilibrium level of
=

Ans.14. AD = R3,350 crore

level of national
Ans.15. MPC = 0.60, 0.80, 0.75, 0.70 (b) Saving at equilibrium
income R 100 crore
MPS 0.40, 0.20, 0.25, 0.30
level
Consumption expenditure at equilibrium
Ans.16. C= 730 of national income = R 200 crore
Ans.17. Y = 50 crore
(a) Equilibrium level ofincome R1,500
=

Ans.37.
Ans.18. MPS = 0.4, 0.4, 0.6
of
APS -0.4, 0, 0.2
(b) Saving at equilibrium level
income R200 crore
Ans.19. MPC = 0.7, 0.7, 0.7
Consumption expenditure at equilibrium
APS 0.6, 0.15, 0, 0.075
level of income R 1,300 crore
Ans.20. APS = 0.7, 0.15, 0.033 crore
(a) Equilibrium level ofincome
Ans.38.
= R1,250
C 110, 170, 230, 290 level of
Ans.21. APC 1.6, 1.15, 1.0
(b) Saving at equilibrium
income = 200 crore

MPC 0.7, 0.7, 0.7

Consumption expenditure at equilibrium
Ans.22. (a) Investment multiplier=5 level of income R 1,050 crore =

income R 2,500 crore

(b) Change in final
=

Ans.39.
=5
Ans.23. (a) Investment multiplier
Ans.40.
R 3,500 crore
(b) Change in final income
=

Ans.41.
5
Ans.24. (a) investment multiplier
Ans.42.(a) K1,000 crore
(b) Change in final income R6,000
crore=
300 crore
crore
Ans.43. (a) Equilibrium level ofincome
income R 5,000
Change in final
=
Ans.25. level of
R 1,500 crore (b) Saving at equilibrium
in initial investment
=

Ans.26. Change national income = R 100 crore

Ans.27. Change in final income R8,000 crore multiplier =

2
(c) Value of investment
Ans.24 Ans.44.
level of income
Ans.29.(i) Equillibrium 4
|Ans.45. (i) Value of multiplier
=

in the economy =R900crore

o
(infinity)
(i) Value of multiplier
=

income
(i) Ageregate demand at 10
(ii) Value of multiplier
=

600 crore
of 500 crore =

Ans.46. MPC =0.67

(Type text (DIRECTOR-ACHIEVERS VILLA) M-7986541817

BY KRISHAN MAHAJAN
Ans.47. Additional income =
200 crore Ans.72.
Ans.48. MPC = 0.8
Ans.73.
Ans.49. Increase In national income =R 3,500 crore Ans.74. MPC = 0.75
Ans.50. MPC = 0.75
Ans75. Al =1,200
Ans.51. Increase in income = T 3,500 crore Ans.76. NOo
Increase in consumption expenditure =
R2,800 crore
Ans.52. Increase in income = 1,000 crore
Increase in saving = T 400 crore
Ans.53. MPC = 0.75
MPS 0.25
Ans.54
Ans.55. MPC =0.67
Ans.56. MPC = 0.75
Ans.57. False
Ans.58. Consumption expenditure =R1,300
Ans.59. Investment expenditure =R40
Ans.60. National income =R1,500
Ans.61. Investment expenditure =R 250
Ans.62. Autonomous consumption expenditure = 20
Ans.63. (i) Equilibrium level of national income= R12,100
(i) Saving at equilibrium level of national
income 6,000
Ans.64. (i) Investment expenditure at equilibrium
level ofnational income=R 1,500
(ii) Autonomous consumption = R 250
Ans.65. Equilibrium level of income =R7,000
Equilibrium level of consumption
Expenditure =R6,200
Ans.66. Equilibrium level of income = R 19,750
Saving at equilibrium level of income =R 7,000
Ans.67. () Investment expenditure at equilibrium
level ofincome = 300
(i) Autonomous consumption = R 200
(i) Investment multiplier = 4

Ans.68. (i) Equilibrium level if national income 32,00o

(i) Saving at equilibrium level of national
income 3,000
Ans.69. (i) Equilibrium level of national income 3,600
(i) Saving at equilibrium level of national
income 800
Ans.70. Consumption expenditure =R1,650 crore
Autonomous investment =R 350 crore
Marginal propensity to consume = 0.8

Ans.71. (i) Equilibrium level ofincome =R 1,000 crore

(ii) Consumption at equilibrium level
of income=R850 crore

Saving at equilibrium level of income = 150 crore

Type text]
BY KRISHAN MAHAJAN (DIRECTOR-ACHIEVERS VILLA) M-7986541817