Question:
Read the following statements carefully :
Statement 1 : Marginal Propensity to Consume (MPC) exhibits the consumption per unit of income.
Statement 2 : As the national income of a country rises, the proportionate increase in the consumption is always more than the increase in the income.
In the light of the given statements, choose the correct option from the following :
Read the following statements carefully :
Statement 1 : Marginal Propensity to Consume (MPC) exhibits the consumption per unit of income.
Statement 2 : As the national income of a country rises, the proportionate increase in the consumption is always more than the increase in the income.
In the light of the given statements, choose the correct option from the following :
Statement 1 : Marginal Propensity to Consume (MPC) exhibits the consumption per unit of income.
Statement 2 : As the national income of a country rises, the proportionate increase in the consumption is always more than the increase in the income.
In the light of the given statements, choose the correct option from the following :
Show Hint
MPC is an important concept in Keynesian economics, indicating how much of an additional dollar of income will be spent on consumption.
Updated On: Jun 30, 2025
- Statement 1 is true and Statement 2 is false.
- Statement 1 is false and Statement 2 is true.
- Both Statements 1 and 2 are true.
- Both Statements 1 and 2 are false.
Hide Solution
Verified By Collegedunia
The Correct Option is A
Solution and Explanation
Statement 1 is true because Marginal Propensity to Consume (MPC) is the ratio of change in consumption to the change in income. It reflects the consumption per unit of income.
Statement 2 is false because, in reality, as national income rises, the proportionate increase in consumption generally decreases. This means the MPC tends to decline as income rises.
Statement 2 is false because, in reality, as national income rises, the proportionate increase in consumption generally decreases. This means the MPC tends to decline as income rises.
Was this answer helpful?
0
0
Top Questions on Income and Employment
- Read the following text carefully:
The Labour Force Participation Rate (LFPR) measures the percentage of the population either employed or actively seeking employment in a nation. In India, the labour force grew by 99·2 million persons between 2000 – 2019. The labour force grew from 396·3 million to 495·5 million.
During 2012 – 2019, the labour force grew without a matching increase in employment, leading to higher unemployment.
The gender disparity in India’s labour market is notable with women’s LFPR at 32·8% in 2022, significantly lower than men’s LFPR at 77·2%. This is a major reason for India’s overall low LFPR, which is lower than the global average of 47·3%.
During 2000 – 2019, rural LFPR declined by 14·1%, compared to a 3·5% decline in urban areas. This trend reversed between 2019 – 2022, with rural LFPR increasing by 6% (especially among rural women) and urban LFPR by 2·1%. These shifts suggest that fluctuations occur in women’s labour market participation, particularly in rural areas.
This significantly affected the overall LFPR. Women join the workforce during economic hardships and move out when conditions improve.
On the basis of the given text and common understanding, answer the following questions:
(a) Define unemployment.
(b) Write the meaning of Labour Force Participation Rate (LFPR).
(c) Comment upon the gender disparities in rural and urban Labour Force Participation Rate (LFPR) during 2000 – 2019.- CBSE CLASS XII - 2025
- Economics
- Income and Employment
- Read the following text carefully:
In an economy, a significant reduction in Aggregate demand raised concerns about future growth prospects of the country. This economic downturn underscores the urgent need for strategic measures to boost confidence of households and stimulate economic activities.
Based on the above text and common understanding, explain the measures which the government may take to stabilise the indicated situation.- CBSE CLASS XII - 2025
- Economics
- Income and Employment
- Equilibrium level of income for Economy B.
- CBSE CLASS XII - 2025
- Economics
- Income and Employment
- Elaborate the meaning of disguised unemployment with the help of a suitable example.
- CBSE CLASS XII - 2025
- Economics
- Income and Employment
- Discuss briefly, causes and consequences of tax reforms taken by the Indian Government during economic reforms.
- CBSE CLASS XII - 2025
- Economics
- Income and Employment
View More Questions
Questions Asked in CBSE CLASS XII exam
State and elaborate, whether the following statements are true/false, with valid arguments
Under the Golden Revolution there was tremendous growth in horticulture, making India the world leader in this field.- CBSE CLASS XII - 2025
- Rural Development
- “The trade and investment policy initiated by the Indian Government during 1991 economic reforms involved some major decision-making with respect to local industries.” Elaborate any two major decisions and their respective impacts on the Indian economy.
- CBSE CLASS XII - 2025
- Economic Reforms
- “British colonial rule in India resulted into systematic deindustrialisation of Indian indigenous industries.” Explain the two-fold motive of the British with valid arguments.
- CBSE CLASS XII - 2025
- Indian Economy
- State one example each of a Maharatna and a Miniratna company in the public sector in India.
- CBSE CLASS XII - 2025
- Public Sector Undertakings
- "All consumption goods are durable in nature." Defend or refute the given statement with a valid argument.
- CBSE CLASS XII - 2025
- Goods and Services
View More Questions