Match List I with List II
|
List - I |
List – II |
||
|
(A) |
Y |
(I) |
Y - C |
|
(B) |
C |
(II) |
$\frac{1}{MPS}$ |
|
(C) |
S |
(III) |
$\overline{A}+c.Y$ |
|
(D) |
Investment multiplier |
(IV) |
$\overline{C}+c.Y$ |
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 3
Y (ex ante, or planned, ouput of final goods)= $\overline{A}+c.Y$ (where $\overline{A}$ = $\overline{C}+\overline{I}$ is the total autonomous expenditure in the economy.
The consumers demand can be expressed by the equation C = $\overline{C}+c.Y$ (Where $\overline{C}$ is Autonomous expenditure and c is the marginal propensity to consume.)
Savings is that part of income that is not consumed. In other words, S = Y - C
The investment multiplier = $\frac{1}{MPS}$