As we know that the equilibrium level of national income in two sector model is determined where, Question 1.

As we know that equilibrium level of national income is determined under the given condition of aggregate demand and aggregate supply, and has tendency to stick to that level i.e., where aggregate demand is equal to aggregate supply.

Is study of cotton textile industry a microeconomic study or macroeconomic study?

AD = C + I

There is increase in investment of Rs 1000 crore in an economy. [AI 2006] Measure the level of ex-ante aggregate demand when autonomous investment and consumption expenditure (A) is Rs 50 crores, and MPS is 0.2 and level of income (Y) is Rs 4000 crores.

[AI 2013 (Set II)] If MPC and MPS are equal, value of multiplier is, If the ratio of marginal propensity to consume and marginal propensity to save is 4 : 1, the value of investment multiplier will be 4. As a result of increase in investment national income increases by Rs 600 crore.

(ii) Consumption expenditure at equilibrium level of national income. Answer: Question 7. c = 50 + 0.5Y is the consumption function; where C is consumption expenditure and Y is national income and investment expenditure is 72000 in an economy. =, Question 1.

Derive the multiplier when MPS is: Use diagram.

(a) 0 (b) 1 Answer: The level at which the economy is in equilibrium, i.e., where aggregate demand = aggregate supply, is called effective demand. Investment in an economy increases by Rs 700 crore. (ii) Indirect Taxes. (a) At equilibrium planned savings are equal to planned investment.

Question 2. If marginal propensity to consume is 0.75, calculate the increase in investment. What is the total increase in income?

We know that one man’s expenditure is another man’s income. [1 mark] There is infinite increase in income. (c) Decision whether to invest or not The investor goes on making additional investments until M.E.I becomes equal to the rate of interest.

Short Answer Type Questions (3-4 Marks), Chapter 1 Introduction to Macroeconomics and its Concepts, Chapter 2 National Income and Related Aggregates, Chapter 5 Aggregate Demand and Its Related Concepts, Chapter 6 National Income Determination and Multiplier, Chapter 7 Excess Demand and Deficient Demand, Chapter 8 Government Budget and the Economy, Chapter 1 – Indian Economy on the Eve of Independence, Chapter 5 – Human Capital Formation in India, Chapter 7 – Employment: Growth, Informalisation and other Issues, Chapter 9 – Environment and Sustainable Development, Chapter 10 – Inflation Problem and Policies, Class 12 Physical Education Revision Notes, Previous Year Question Paper for Class 12, CBSE Previous Year Question Paper for Class 10, CBSE Previous Year Question Paper for Class 12. [])), +((!+[]+(!![])+!![]+!![]+!![]+!![]+!![]+!![]+[])+(!+[]+(!![])+!![])+(!+[]+(!![])+!![]+!![]+!![]+!![]+!![]+!![])+(!+[]-(!![]))+(!+[]+(!![])+!![]+!![])+(+!![])+(!+[]+(!![])+!![]+!![]+!![]+!![])+(!+[]+(!![])+!![]+!![])+(+!![]))/+((!+[]+(!![])+!![]+[])+(!+[]+(!![])+!![]+!![]+!![]+!![]+!![]+!![]+!![])+(+!![])+(!+[]+(!![])-[])+(!+[]+(!![])+!![]+!![]+!![])+(!+[]+(!![])+!![]+!![]+!![]+!![]+!![])+(!+[]+(!![])+!![]+!![]+!![])+(!+[]+(!![])+!![])+(!+[]+(!![])+!![]+!![]+!!

Your email address will not be published. 4-4MPC=1 M.E.I is very important factor in determining the investment demand.

800 = 100 + 560 + 1 [CBSE 2008] [CBSE 2008] Answer: In the above mentioned diagram, aggregate demand is measured on vertical axis and national income is measured on horizontal axis. Or [CBSE 2006] Explain how is equilibrium level of income and employment established through AD and AS? How do we measure it? Calculate National Income and Net National Disposable Income from the following data (Delhi 2008) Ans. Its central problem is price determination and allocation of resources. Or Save my name, email, and website in this browser for the next time I comment. Required fields are marked *. Equilibrium level of income is ?2,000. Consequently, national income will increase from OY to OAs, we know positive relationship exists between national income and consumption, so consumption will increase which will, increase the new aggregate demand A, till we reach the new equilibrium level of output i.e., Oat.

From the following data, calculate national income by (a) income method, and (b) expenditure method. It helps to solve the central problem of 'full employment of resources' in an economy.Be it noted that macroeconomic theory is also called 'Theory of Income and Employment' because it tries to explain how level of income and employment is determined in an economy and how unemployment can be removed.