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If MPC is 0.75 and change in initial Investment is 2000 crore. Calculate increase in induces consumption and leakages in the economy 6000?
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If MPC is 0.75 and change in initial Investment is 2000 crore. Calcula...
Calculation of Increase in Induced Consumption:
To calculate the increase in induced consumption, we need to multiply the marginal propensity to consume (MPC) by the change in initial investment.
Given:
MPC = 0.75
Change in initial investment = 2000 crore
Formula:
Increase in induced consumption = MPC * Change in initial investment
Calculation:
Increase in induced consumption = 0.75 * 2000 crore
Increase in induced consumption = 1500 crore
Therefore, the increase in induced consumption in the economy is 1500 crore.
Calculation of Leakages in the Economy:
To calculate the leakages in the economy, we need to subtract the increase in induced consumption from the change in initial investment.
Given:
Increase in induced consumption = 1500 crore
Change in initial investment = 2000 crore
Formula:
Leakages = Change in initial investment - Increase in induced consumption
Calculation:
Leakages = 2000 crore - 1500 crore
Leakages = 500 crore
Therefore, the leakages in the economy amount to 500 crore.
Explanation:
- Induced consumption refers to the increase in consumption expenditure resulting from an increase in income or investment. In this case, the increase in induced consumption is calculated by multiplying the marginal propensity to consume (MPC) by the change in initial investment.
- The MPC represents the proportion of additional income that is spent on consumption. Here, the MPC is given as 0.75, which means that for every additional unit of income, 0.75 units will be spent on consumption.
- The change in initial investment is given as 2000 crore. This represents the increase in investment in the economy.
- By multiplying the MPC (0.75) by the change in initial investment (2000 crore), we find that the increase in induced consumption is 1500 crore.
- Leakages in the economy refer to the amount of income that is not spent on consumption but saved or used for imports. In this case, leakages are calculated by subtracting the increase in induced consumption from the change in initial investment.
- By subtracting the increase in induced consumption (1500 crore) from the change in initial investment (2000 crore), we find that the leakages in the economy amount to 500 crore.
- These leakages represent the portion of income that is not spent on consumption and can have an impact on the overall economy, such as decreasing aggregate demand or leading to an increase in savings.
To calculate the increase in induced consumption, we need to multiply the marginal propensity to consume (MPC) by the change in initial investment.
Given:
MPC = 0.75
Change in initial investment = 2000 crore
Formula:
Increase in induced consumption = MPC * Change in initial investment
Calculation:
Increase in induced consumption = 0.75 * 2000 crore
Increase in induced consumption = 1500 crore
Therefore, the increase in induced consumption in the economy is 1500 crore.
Calculation of Leakages in the Economy:
To calculate the leakages in the economy, we need to subtract the increase in induced consumption from the change in initial investment.
Given:
Increase in induced consumption = 1500 crore
Change in initial investment = 2000 crore
Formula:
Leakages = Change in initial investment - Increase in induced consumption
Calculation:
Leakages = 2000 crore - 1500 crore
Leakages = 500 crore
Therefore, the leakages in the economy amount to 500 crore.
Explanation:
- Induced consumption refers to the increase in consumption expenditure resulting from an increase in income or investment. In this case, the increase in induced consumption is calculated by multiplying the marginal propensity to consume (MPC) by the change in initial investment.
- The MPC represents the proportion of additional income that is spent on consumption. Here, the MPC is given as 0.75, which means that for every additional unit of income, 0.75 units will be spent on consumption.
- The change in initial investment is given as 2000 crore. This represents the increase in investment in the economy.
- By multiplying the MPC (0.75) by the change in initial investment (2000 crore), we find that the increase in induced consumption is 1500 crore.
- Leakages in the economy refer to the amount of income that is not spent on consumption but saved or used for imports. In this case, leakages are calculated by subtracting the increase in induced consumption from the change in initial investment.
- By subtracting the increase in induced consumption (1500 crore) from the change in initial investment (2000 crore), we find that the leakages in the economy amount to 500 crore.
- These leakages represent the portion of income that is not spent on consumption and can have an impact on the overall economy, such as decreasing aggregate demand or leading to an increase in savings.
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If MPC is 0.75 and change in initial Investment is 2000 crore. Calculate increase in induces consumption and leakages in the economy 6000?
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If MPC is 0.75 and change in initial Investment is 2000 crore. Calculate increase in induces consumption and leakages in the economy 6000? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about If MPC is 0.75 and change in initial Investment is 2000 crore. Calculate increase in induces consumption and leakages in the economy 6000? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for If MPC is 0.75 and change in initial Investment is 2000 crore. Calculate increase in induces consumption and leakages in the economy 6000?.
If MPC is 0.75 and change in initial Investment is 2000 crore. Calculate increase in induces consumption and leakages in the economy 6000? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about If MPC is 0.75 and change in initial Investment is 2000 crore. Calculate increase in induces consumption and leakages in the economy 6000? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for If MPC is 0.75 and change in initial Investment is 2000 crore. Calculate increase in induces consumption and leakages in the economy 6000?.
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