Check sibling questions

Example 26

The saving function of an economy is S = - 200 + 0.25Y. The economy is in Solarium level when income is equal to 2,000. Calculate:

  1. Investment expenditure at equilibrium of income;
  2. Autonomous consumption;
  3. Investment multiplier.
View Answer

Example 27

If saving function for an economy is given as: S = when - 500 + 0.2Y will and become investment expenditure is ₹ 100 crores, then determine:

  1. Level of income when saving will become zero
  2. Level of income when saving is equal to investment.
View Answer

What is Break Even level of Income?

It is level of income where we are earning enough to meet out consumption

Hence at this level

Income = Consumption

Note

Savings are 0 at this level

 

Example 28

The equilibrium level of income in an economy is ₹ 5,000 crores. The autonomous consumption expenditure is equal to ₹ 250 crores and investment expenditure ₹ 1,000 crores Calculate:

  1. Consumption expenditure at equilibrium level of national income;
  2. Marginal Propensity to save;
  3. Saving Function;
  4. Investment Multiplier;
  5. Break-even level of Income.
View Answer

Example 32

The saving function of an economy is given as: S = - 25 + 0-25 Y. If the planned investment is ₹ 200 crores, calculate the following:

  1. Equilibrium level of income in the economy.
  2. Aggregate demand at income of ₹ 500 crores.
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Example 33

The saving function of an economy is given as: S = (-) 10 + 0-20 Y. If the ex-ante investments are ₹ 240 crores,

calculate the following:

  1. Equilibrium level of income in the economy.
  2. Additional investments which will be needed to double the present level of equilibrium income.
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NCERT Questions

No questions in this part

Other Books

Question 1

The function of saving (S) is given to be: S = -40 + 0.25Y.

If planned investments are Rs100 crores, determine:

  1. Equilibrium level of income;
  2. Level of consumption at equilibrium;
  3. Savings at equilibrium
View Answer

Question 2

The saving function of an economy is given as: S = -50 + 0.4Y.

The economy is in equilibrium at the income level of Rs 1,500 crores.

Calculate:

  1. Investment at equilibrium income level;
  2. Autonomous consumption;
  3. Multiplier
View Answer

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CA Maninder Singh is a Chartered Accountant for the past 12 years. He also provides Accounts Tax GST Training in Delhi, Kerala and online.