Read the passage carefully and answer the questions based on the passage:
Calculate various parameters of Aggregate Demand, Aggregate Supply and related concepts
|
Income (in Crore) |
Consumption (in crore) |
|
0 |
50 |
|
50 |
75 |
|
100 |
100 |
|
200 |
150 |
|
300 |
200 |
|
400 |
250 |
From the given table, identify the level of income, where Average Propensity to Save (APS) becomes zero:
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → 100
APS = Saving / Income
Saving = Income – Consumption,
we compute APS = (Income – Consumption) / Income
Now, let’s calculate APS for each income level:
| Income (₹ Crore) | Consumption (₹ Crore) | Saving = Income – Consumption | APS = Saving / Income |
|---|---|---|---|
| 0 | 50 | -50 | Not defined (0/0) |
| 50 | 75 | -25 | -25 / 50 = -0.5 |
| 100 | 100 | 0 | 0 / 100 = 0 |
| 200 | 150 | 50 | 50 / 200 = 0.25 |
| 300 | 200 | 100 | 100 / 300 = 0.33 |
| 400 | 250 | 150 | 150 / 400 = 0.375 |
APS becomes zero at Income = ₹100 crore