Answer the following A) the value …
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Posted by Manav Sharma 5 years, 4 months ago
- 2 answers
Gaurav Seth 5 years, 4 months ago
A) Yes, APS can be negative in situations when S is negative, i.e. when consumption exceeds income, e.g.
Y = 50, C = 100 .
and S = Y-C = - 50, APS = S/Y = -50/50 = -1
B)
The maximum value of multiplier is infinity when the value of MPC is 1. It implies that the economy is consuming the entire additional income.
The minimum value of multiplier is one when the value of MPC = 0. It implies that the economy is saving the entire the additional income.
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Gaurav Seth 5 years, 4 months ago
D) An economy can be in equilibrium when there is unemployment in the economy when the aggregate demand= aggregate supply in the economy. It refers to a situation when aggregate demand is equal to the aggregate supply at a level where the resources are not fully employed.
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