Practice Consumption (4.1.1) - Determination of Income and Employment

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6 sample questions

Question 1.
Define autonomous consumption.
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Think about spending that happens without income.
Question 2.
What does MPC stand for?
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You can derive this from marginal change.
3Question 3.
What does the consumption function describe?
- The relationship between income and consumption
- The total income of a household
- The savings rate of households
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It involves spending and earnings.
4Question 4.
True or False: Autonomous consumption occurs only when income is above zero.
- True
- False
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Consider basic needs.
Question 5.
Given that a family's income increases by Rs. 500 and their MPC is 0.9, calculate how much they will consume and how much they will save.
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Use the MPC to determine consumption.
Question 6.
If national income rises and consumption does not increase proportionately, what impact could this have on the overall economy?
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Think about demand and supply balance dynamics.

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