NUMERICAL PROBLEMS OF AGGREGATE DEMAND & MULTIPLIER

NUMERICAL PROBLEMS OF AGGREGATE DEMAND & MULTIPLIER 

   A D = Aggregate demand refers to the sum of total expenditure on the domestic produced goods and services during the period of an accounting year.

Principle components of A D : -

C = Private consumption expenditure.

I = Private investment.

G = Govt. Expenditure,

X  - M = Net export.

A D = C+I+G+ X - M.

PROPENSITY TO CONSUME: - It refers to ratio between C and Y . It shows the level of C with respect to a given level of Y.

It is two aspect: -

1. APC , 2. MPC.

APC= It is ratio between total consumption and total income at a give level of income in the economy.

         APC= C/Y

MPC= It refers to the ratio between change in consumption (C) and change in income(Y)

MPC= C/Y

                                         HIGH ORDER THINKING SKILLS

1. If the value of average propensity to same is (-) 0.6, What will be the true value of APC?

2.If the mps is 0.3,What is the value of MPC?

3. If average propensity to consumer is 1.5, What is the average propensity to save?

4. Find C, When C=200, MPC = 20.5 and Y=1000 ?

5. When APC and MPC are two parameters . the value of which parameters can be greater than one , and when .

6.If personal disposable income is Rs. 1000/ corers , and consumption expenditure is Rs150crors ,find out average propensity to save.

7. Find S when C=200,MPC=.4andY=100.

8. Can APS ever be negative ?If yes, Give example.

9. find Cat equilibrium Y when ; Y=6000,and C=100+.75Y.

10.Find equilibrium Y ,when C=100+.5Y and I=1000/-

11. Find equilibrium saving and equilibrium saving and equilibrium I, When Y=4400/- MPC=.75 and  c=100.

12.Give that S= -25+.5Y and I=5000, Find equilibrium Y and equilibrium C .

13. Give C= 400 + 0.9Y and I = 4,000 . Find (1) Equilibrium  Y (II)  S and C at equilibrium at Y.

14. in an economy a govt. make some additional investment. Finds its value when MPC = 0.5 and increase in income = 1000.

15. If MPC = 0.75 , how much additional investment is required is required to increase in income by 600. Also fing multiplier.

16. Find MPC  when investment multiplier= 1.

17. Find the value of multiplier when MPC = MPS.

18. If an economy, the consumption expenditure is 8,750 crores and the ratio of average propensity to consume and average propensity to save is 7 : 1. Calculate the level of income in the economy.

19. In an economy total saving are Rs. 2,000 crores and the ratio of APS and APC is 2 : 7 . Calculate the level of income in the economy.

20.  In an economy the level of income is 15,000 crores and ratio of APC and APS is 4 : 1, How much is total consumption expenditure in the economy? Calculate.

 21. In an economy C = 300 + 0.8 Y and I = 500 . Calculate the following : -

           (i). Equilibrium level of income.

           (ii). Consumption expenditure at the equilibrium level of income.

22. In an economy  S = 0 - 50 + 0.5 Y is the saving function, Calculate :

          (i) Equilibrium level  of income,

          (ii) Consumption expenditure at equilibrium level of National  income.

23. From the following information about an economy , Calculate (i) Its equilibrium  level of NY and Saving at equilibrium level of NY,

       Consumption function C = 200 + 0.9 Y. Investment expenditure = I = 3000 .

24. In an economy the equilibrium level of income is Rs. 12, 000 Crores. The ratio of MPC and MPS is 3 : 1 , Calculate the additional investment needed to reach a new equilibrium  level of income of

      Rs. 20,000 crores.

25. Given consumption function C = 100 + 0.75 Y and investment expenditure is Rs. 1000. Calculate: -

   (i) Equilibrium level of income (ii) Consumption expenditure at equilibrium level of N Y .

26.  In an economy S = 50 + 0.5 Y is the saving function and  investment expenditure is 7,000 crores.

      (i) Equilibrium level of  National income

      (ii) Consumption level of income at equilibrium level of  national income.

27.  From the following information about an economy , calculate (i) Equilibrium level of National  income  (ii)  Saving at equilibrium level of national income :

       Consumption function = C = 200 + 0.9 Y and Investment expenditure Investment = 3000.

28. C = 100 + 0.75 Y is a consumption function and Investment expenditure 800. Calculate (i) Equilibrium level of N Y. (ii) Saving at equilibrium level of NY.

29. In an economy 75 % of increase in income is spend on consumption . Investment increase by Rs. 1,000 crores . Calculate (i) Total income National income.

      (ii) Total increase in consumption expenditure.

30. In an economy consumption function is  C = 500 + 0.75 Y . Calculate equilibrium level Y and Consumption expenditure when investment level of income is 5,000.

31.   . In an economy consumption function is  C = 600 + 0.94 Y . Calculate equilibrium level Y and Consumption expenditure when investment level of income is 5,00.

32. When investment multiplier is 1, the value of MPC is zero, is it true or false. give reasons for your answer.

33. In an economy  MPC is 0.75. Investment expenditure in the economy increase by 75 crores. Calculate the total increase in NY.

34. In an economy the MPS = 0.4, NY increases by 200 crores as a result of change in investment. Calculate the change in investment.

35. As an increase in investment by 60crores , N Y rises by rs. 240. calculate MPC.

36. An economy is in equilibrium. Its consumption function is C = 300 + 0.8 Y, where C is consumption expenditure and Y is income and investment is 700. Find NY.

37.  An economy is in equilibrium . The consumption function is 1,000. Find out investment expenditure.

38. An economy is in equilibrium. Its  NY is 5,000 and autonomous consumption expenditure is Rs. 500. What is the total consumption expenditure is MPC is 0.7.

39. Measure the value of ex - ante average demand when autonomous consumption expenditure is Rs. 50 crores and MPS is 0.2 and level of income is Rs. 4000 crores.

State, whether the economy is in equilibrium or not?