An economy is in equilibrium. From the following data calculate autonomous consumption.

1. Income = 10000
2. Marginal propensity to save = 0.2
3. Investment = 1500

Measure the level of ex-ante aggregate demand when autonomous investment and consumption expenditure (A) is Rs. 50 crores, and MPS is 0.2 and level of income (Y) is Rs. 4000 crores. State whether the economy is in equilibrium or not (cite reasons).

What do you understand by 'parametric shift of a line'? How does a line shift when its:

1. Slope decreases,
2. Its intercept decreases?

Differentiate between APC and MPC.

What is investment multiplier? Explain its working using a suitable numerical example.

What is ex-Ante consumption? Distinguish between autonomous consumption and induced consumption.

The value of marginal propensity to consume is 0.6 and initial income in the economy is ₹ 100 crores. Prepare a schedule showing Income, Consumption and Saving. Also show the equilibrium level of income by assuming autonomous investment of ₹ 80 crores.

Explain the components of aggregate demand.
OR
State components of AD. Describe any one.

Explain the relationship between marginal propensity to consume and investment multiplier.

What happens to the level of national income when aggregate demand falls short of aggregate supply?