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Economics · 2022 · 2 marks
Determination of Income and EmploymentAggregate Demand and its Components2 marksApplyvery short answer
CBSE 2022 · Region 5 · Set 3 · Q5
(a) At the break-even point level of incomes for the economy is ₹ 10,000 crores and if the people tends to save 20 per cent of their additional…
(a)
At the break-even point level of incomes for the economy is ₹ $\displaystyle 10{,}000$ crores and if the people tends to save $\displaystyle 20$ per cent of their additional income, then calculate the value of autonomous consumption.
OR
(b)
An Economy is in equilibrium, calculate the Marginal Propensity to Save (MPS) from the following :
(i)
National Income (Y) = ₹ $\displaystyle 4{,}400$
(ii)
Autonomous Consumption ($\displaystyle \bar{C}$) = ₹ $\displaystyle 1{,}000$
(iii)
Investment Expenditure (I) = ₹ $\displaystyle 100$
Marking-scheme solution
(a)
Given, MPS = $\displaystyle 0$·$\displaystyle 2$; Y = C = $\displaystyle 10{,}000$ (∵ At Break Even Point Y = C)
As we know, MPC + MPS = $\displaystyle 1$
MPC = $\displaystyle 1$ - $\displaystyle 0.2$ = $\displaystyle 0$·$\displaystyle 8$
C = $\displaystyle \bar{c}$ + bY
$\displaystyle 10{,}000$ = $\displaystyle \bar{c}$ + $\displaystyle 0$·$\displaystyle 8$ $\displaystyle (10,000)$
Autonomous Consumption ($\displaystyle \bar{c}$) = ₹ $\displaystyle 2{,}000$ crores
OR
(b)
Given, National Income = ₹ $\displaystyle 4{,}400$
Autonomous Consumption = ₹ $\displaystyle 1{,}000$
Investment Expenditure = ₹ $\displaystyle 100$
We know that at equilibrium level, Y = C + I; $\displaystyle Y = \bar{c} + MPC(Y) + \bar{I}$
$\displaystyle 4{,}400$ = $\displaystyle 1{,}000$ + MPC$\displaystyle (4,400)$ + $\displaystyle 100$
MPC = $\displaystyle 0$·$\displaystyle 75$
MPS = $\displaystyle 1$ - $\displaystyle 0.75$ = $\displaystyle 0.25$ (MPS = $\displaystyle 1$ - MPC)
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CBSE Class 12 Economics past-paper question from the 2022 board exam, with the answer as CBSE’s own marking scheme gives it. Where our answers come from.