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CBSE 2022 Class 12 Economics Outside Delhi Set 1 (Term 2)

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Question : 3 of 19
Marks: +1, -0
On the basis of following schedule, answer the given questions:
 Income (in ₹ crores)  Savings (in ₹ crores)
 0  -20
 50  -10
 100  0
 150  30
 200  60
(a) Calculate Marginal Propensity to Save (MPS) at ₹150 crores level of income.
(b) What is the value of Autonomous Consumption?
Solution:  
 (Y) Income (in crores)  (S) Savings (in crores)   ΔS (in crores)   ΔY (in crores)
 0  -20  -  -
 50  -10  −10−(−20)=10-10-(-20)=10  50−0=5050-0=50
 100  0  0−(−10)=100-(-10)=10  100−50=50100-50=50
 150  30  30−0=3030-0=30  150−100=50150-100=50
 200  60  60−30=3060-30=30  200−150=50200-150=50
(a)   MPS at  150  =  ΔSΔY\;\text{MPS at}\;150\;=\;\frac{\Delta S}{\Delta Y}
  =  3050=0.6\;=\;\frac{30}{50}=0.6
(b) Autonomous consumption (consumption at 0 level of income) Y−S=0−(−20)=20Y-S=0-(-20)=20 crores.
OR
MPC  =75%=0.75MPC\;=75\%=0.75
ΔI  =1,000\Delta I\;=1,000
ΔY  =?\Delta Y\;=?
K  =  11−MPCK\;=\;\frac{1}{1-MPC}
  =  11−0.75=  10.25=4\;=\;\frac{1}{1-0.75}=\;\frac{1}{0.25}=4
K  =  ΔYΔIK\;=\;\frac{\Delta Y}{\Delta I}
4  =  ΔY10004\;=\;\frac{\Delta Y}{1000}
4×1000  =ΔY4 \times 1000\;=\Delta Y
₹ 4, ⁣000  =ΔY\text{₹ }4,\!000\;=\Delta Y
Thus, the increase in income =₹4,000=\text{₹} 4,000 crores
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