$8$(A) (I) Estimate the value of subsistence level of consumption expenditure from the following data about an economy which is in equilibrium :

(i)National Income (Y) = ₹ $\displaystyle 1,200$ crore(ii)Marginal Propensity to Save (MPS) = $\displaystyle 0.20$(iii)Investment Expenditure ($\displaystyle \bar{I}$) = ₹ $\displaystyle 100$ crore

(II) “An economy facing an increase in unintended accumulation of inventories would try to reduce Aggregate Demand.” Defend or refute the above statement with valid arguments.

OR

(B) (I) Complete the following table :

Situation	Change in Investment (ΔI)	Change in Income (ΔY)	Marginal Propensity to Consume (MPC)	Investments Multiplier (K)
(a)	$\displaystyle 200$	(i) ______	$\displaystyle 0.8$	(ii) ______
(b)	(iii) ______	$\displaystyle 2000$	(iv) ______	$\displaystyle 4$
(c)	$\displaystyle 1000$	(v) ______	$\displaystyle 0.5$	(vi) ______

(II) Identify the monetary measures being referred to in the following statements. Discuss whether the tool would be used during a situation of excess demand or deficient demand.

(i)Selling off government securities (G-Sec) to public by the central bank.(ii)Encourage commercial banks to park their surplus funds with the Reserve Bank of India (RBI).

Economics · Determination of Income and Employment