Test Index

CBSE 2020 Class 12 Economics Outside Delhi Set 3

© examsnet.com
Question : 3 of 7
Marks: +1, -0
Given the following information, state whether the economy is in equilibrium or not:
 S.No.  Particulars  Amount
 (i)  Autonomous Consumption & Investment Expenditure (A‾)(\overline{A})  ₹ 700 crores
 (ii)  Marginal Propensity to Consume (MPC)  0.8
 (iii)  National Income  ₹ 4,000 crores
Solution:  
The economy is in equilibrium when AD=AS(Y)A D=A S(Y)
Autonomous consumption and Investment expenditure =₹700=\text{₹} 700 crores
Marginal propensity to consume (MPC) =0.8=0.8
National Income (Y)=₹4,000(Y)=\text{₹} 4,000 crores
  =(C‾)+MPC(b)×Y\;=(\overline{C}) + MPC(b) \times Y
  =700+0.8×4,000\;=700+0.8 \times 4,000
  =700+3,200=3,900\;=700+3,200=3,900
  =₹3,900   crores   \;=\text{₹} 3,900 \;\text{ crores } \;
( ₹3,900\text{₹} 3,900 crores is not equal to ₹4,000\text{₹} 4,000 crores)
The economy is not in equilibrium.
© examsnet.com
Go to Question:
Prev Question
Next Question