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Income(rs) saving:-40,-20,0,30,50. 0 50 100 150 200 Average propensity to consume 0.8 Marginal propensity to consume 0.6?
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Income(rs) saving:-40,-20,0,30,50. 0 50 100 150 200 Average propensity...
Explanation of Income, Saving and Propensities


Income and Savings


- The given income levels are: rs -40, -20, 0, 30, 50.
- Income levels can be negative if expenses exceed income.
- The savings corresponding to each income level are: -40, -20, 0, 30, and 50.
- Negative savings mean that the expenses are higher than income, and the person is borrowing or using savings to cover expenses.
- Positive savings mean that the income is higher than expenses, and the person is saving money.

Average Propensity to Consume (APC)


- Average propensity to consume (APC) is the ratio of consumption expenditure to income.
- APC = Consumption Expenditure / Income.
- The given APC is 0.8, which means that out of every Rs. 1 earned, the person spends 80 paise and saves 20 paise.

Marginal Propensity to Consume (MPC)


- Marginal propensity to consume (MPC) is the ratio of change in consumption expenditure to change in income.
- MPC = Change in Consumption Expenditure / Change in Income.
- The given MPC is 0.6, which means that out of every Rs. 1 increase in income, the person spends 60 paise and saves 40 paise.

Explanation


- The given data shows that as income increases, savings also increase.
- The APC is 0.8, which means that the person is spending a large portion of their income on consumption, and saving only a small portion.
- The MPC is 0.6, which means that the person is increasing their consumption expenditure by 60 paise for every Rs. 1 increase in income.
- This suggests that the person has a relatively high marginal propensity to save (MPS) of 0.4, which means that they are saving 40 paise out of every Rs. 1 increase in income.
- Overall, the person is saving a significant portion of their income, but also spending a large portion on consumption.
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Read the report given below and answer the questions that follow:When, at a particular price level, aggregate demand for final goods equals aggregate supply of final goods, the final goods or product market reaches its equilibrium. Aggregate demand for final goods consists of ex-ante consumption, ex-ante investment, government spending, etc. The rate of increase in ex-ante consumption due to a unit increment in income is called marginal propensity to consume. For simplicity we assume a constant final goods price and constant rate of interest over short run to determine the level of aggregate demand for final goods in the economy. We also assume that the aggregate supply is perfectly elastic at this price. Under such circumstances, aggregate output is determined solely by the level of aggregate demand. This is known as effective demand principle. An increase (decreas e) in autonomous spending causes aggregate output of final goods to increase (decrease) by a larger amount through the multiplier process.What is the circumstance when aggregate output is determined solely by the level of aggregate demand called?

Read the report given below and answer the questions that follow:When, at a particular price level, aggregate demand for final goods equals aggregate supply of final goods, the final goods or product market reaches its equilibrium. Aggregate demand for final goods consists of ex-ante consumption, ex-ante investment, government spending, etc. The rate of increase in ex-ante consumption due to a unit increment in income is called marginal propensity to consume. For simplicity we assume a constant final goods price and constant rate of interest over short run to determine the level of aggregate demand for final goods in the economy. We also assume that the aggregate supply is perfectly elastic at this price. Under such circumstances, aggregate output is determined solely by the level of aggregate demand. This is known as effective demand principle. An increase (decreas e) in autonomous spending causes aggregate output of final goods to increase (decrease) by a larger amount through the multiplier process.The rate of increase in __________________ due to a unit increment in income is called marginal propensity to consume.

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Income(rs) saving:-40,-20,0,30,50. 0 50 100 150 200 Average propensity to consume 0.8 Marginal propensity to consume 0.6?
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