Answer the following questions:
1. Which situations motivated J.M. Keynes to develop his theory of income and employment?
2. Define aggregate demand.
3. Describe the components of aggregate demand.
4. Explain the concept of aggregate demand in a two sector economy, using diagram and table (explain diagram and table also – 6 points explained in the video)
5. What is consumption function? Answer format- definition, table, diagram, explanation of table and diagram in 4 points)
6. State the significance of 450 line.
7. Write down the mathematical equation of saving function. Explain its parts.
8. Explain the concept of marginal propensity to consume, using table and diagram.
9. Explain the concept of average propensity to consume, using table and diagram.
10. Distinguish between APC and MPC. (as explained in the video)
11. What is the slope of the consumption curve? What does it show?
12. What is autonomous consumption?
13. What is aggregate supply? Why is AS equal to national income? Explain its components using table and diagram.
14. MPC of consumption curve A is 0.71 and MPC of consumption curve B is 0.9. Which consumption curve out of the two will have a greater slope? Why?
15. Why MPC of developed nation is lower than the MPC of developing nations.
16. Describe the two extreme limits of MPC by giving reason.
17. If MPC is 0.75 and autonomous consumption is 100, what will be the equation of consumption?
18. If MPC is 0.65 and autonomous consumption is 300, calculate the consumptions at 0, 150,300,450,600,750 level of income. Draw a consumption curve on the basis of given values.
19. Calculate the value of aggregate demand at break-even point. If MPC is 0.8, autonomous consumption is 250 and investment is 1700.
20. Level of income I an economy increases from ₹ 20,000 crores to ₹ 70,000 crores. Calculate the increased consumption, if initial consumption is 15000 and MPC is 0.6.
21. Calculate the value of MPC if at income level of ₹ 9000, aggregate demand = ₹ 8300, autonomous consumption is 500 and investment is ₹ 1500.
22. The consumption function of an economy is given as C=60+0.6Y. Calculate break-even level of consumption.
23. On the basis of following information calculate aggregate supply and draw the AS curve.
Consumption 200 250 300 350 400 450 500
Saving. -50 0 50 100 150 200 250
24. Complete the following table.
Income 0,100,200,300
Marginal Propensity to Consume ......., 0.75,0.75,0.75
Saving -30,...., ...., .....,
Average Propensity to consume. ....., ....., ......, .....
25. Complete the following table
Income. 0,50,100,150,200 Saving -20,-10,0,30,60 Marginal Propensity to consume ......, ......, ......., ........., ......
Average Propensity to consume. ...., ......, ......, ......, ......
Concepts of economics have been explained in easy and simple manner.
Beneficial and crucial for all competitive exams, under graduation, post-graduation, NCERT, MBA, BBA and other courses in economics.
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