Page 2 - Home Assignment- AD and related concepts

d. Ex-post saving

10. State whether the following statement is true or false. 1
‘Sum of average propensity to consume and marginal

propensity to consume is always equal to 1.’
11. MPC=0 when 1
a. ∆ < ∆

b. ∆ = ∆
c. ∆ ˂∆
d. ℎ .
12. With the increase in national income, both APC and APS 1
fall. (True/false).
13. Give the meaning of involuntary unemployment.
14. Mention two components of Aggregate supply. 1
15. State whether the following statement is true or false. 1
‘The point at which consumption curve intersects the
45degree line, APS is zero.’

(Short answer type questions-3/4 marks)
16. Distinguish between APC and MPC. 3

17. Differentiate between AD and AS. 3
18. The ratio of MPC to MPS is 4:1. The autonomous 4
consumption is 75. Find the values of
a. MPC and MPS
b. Consumption function and savings function.
c. Breakeven level of national income.
19. If national income is Rs.90crore and consumption 4
expenditure Rs.81cr, find out APS. When income rises to
Rs.100 crore and consumption expenditure to
Rs.88crore, what will be the MPC and MPS.
20 Distinguish between autonomous investment induced 4
investment.
(Long answer type questions-6 marks)
21. Define Aggregate demand and explain its components 6
and outline the aggregate demand model in a four-sector
economy.

22. Explain the steps taken in derivation of saving curve 6
from the consumption curve using diagram.
23. Complete the following table. 6
Income Savings MPC APC
0 -20
50 -10
100 0