Basic Model of Income Determination
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By propensity to save we mean theMarks:1
relation between income and saving.
There is direct relation between income and savings. When income increases the rate of savings also increases and vice-versa.
The relationship between MPC and MPS is thatMarks:1
MPC + MPS = 1
Explanation:MPS + MPC = 1
By consumption function we mean theMarks:1
relation between consumption and income.
Explanation:The relationship between consumption and income is called Propensity to consume or consumption function C = f ( y ).
Net Export is a component ofMarks:1
Explanation:Aggregate demand is the total of consumption expenditure plus government expenditure plus investment expenditure plus net exports.
Aggregate demand is defined as theMarks:1
total demand of goods and services.
Explanation:Aggregate demand is total demand for goods and services in an economy during a particular year.