Numerical questions on MPC, MPS, APC, APS, multiplier, Aggregate demand,

Aggregate supply and Equilibrium level of income

1. If the value of MPS is 0.25, what is the value of multiplier?

2. If the value of MPS is 0.2, what is the value of multiplier?
3. If the value of MPS is 0.1, what is the value of multiplier?
4. If value of MPC is 0.8, find out the multiplier.
5. If the value of MPC is 0.9, find out value of multiplier.
6. If MPS = 1, calculate the value of multiplier.
7. What is the value of MPC, when MPS = 0?
8. If disposable income is Rs. 100 and consumption expenditure is Rs. 80, find APS.
9. If disposable income is Rs. 1,000 and consumption expenditure is Rs. 700, find out
APS.
10. If disposable income is Rs. 500 and saving Rs. 100, find out APC.
11. If disposable income is Rs. 1,000 and saving is Rs. 250, find out APC.
12. If MPS is one, how much is MPC?
13. If APC = 0.75, how much is APS?
14. Calculate APC and APS from the following schedule:
Income (Y) Consumption (C) Ans APC APS
100 80
200 120
300 180
15. If APC of an economy is 0.8, what should be the savings at an income level of Rs.
2,000 crores?
16. The disposable income (Y) is Rs. 1200 crores and consumption expenditure (C) is
Rs. 800 crores. Calculate the APC.
17. If savings are Rs. 500, out of an income of Rs. 5,000, how much is the APS?
18. If disposable income is Rs. 1000 and consumption expenditure is Rs. 750, find out
APS.
19. If income is Rs. 500 and savings are Rs. 100, calculate APC.
20. When income rises from Rs. 1,000 to Rs. 1,100, savings rise by Rs. 30. Find out MPS
and MPC.
21. Calculate MPC from the following schedule:
Income (Y) 0 100 200 300 400
Consumption (C) 60 110 150 180 200

22. The level of income, in an economy, increases from Rs. 20,000 crores to Rs. 70,000
crores, and as a result the level of consumption increases from Rs. 15,000 crores to
Rs. 45,000 crores. Calculate the MPC.
23. In an economy marginal propensity to consume is 0.75. If investment expenditure is
increased by Rs. 500 crore, calculate the total increase in income and consumption
expenditure.
24. In an economy investment expenditure is increased by Rs. 400 crore and marginal
propensity to consume is 0.8. Calculate the total increase in income and savings.
25. In an economy, the marginal propensity to save is 0.25. Investment is increased by
Rs. 200 crore. Calculate the total increase in income and consumption expenditure.
26. If marginal propensity to save is 0.1 and increase in national income is Rs. 500
crore, calculate increase in investment.
27. By increase in investment of Rs. 100 crore, national income of a country increases
by Rs. 250 crore. Find out the marginal propensity to consume.
28. If increase in investment is Rs. 125 crore, national income of a country increases by
Rs. 500 crore, calculate marginal propensity to save.
29. Given MPC = 0.9 and increase in investment equal to Rs. 100 crore, calculate the
value of multiplier and total increase in income.
30. An increase in investment in a country leads to increase in national income by Rs.
200 crore. If marginal propensity to consume is 0.75, what is the increase in
investment?
31. Given increase in investment of Rs. 100 crore, and marginal propensity to consume
equal to 0.8, find out increase in national income.
32. As a result of increase in investment by Rs. 75 crore, national income rises by Rs.
300 crore. Calculate the 'marginal propensity to save'.
33. In an economy, marginal propensity to save is 0.10. How much increase in
investment is required so that national income rises by Rs. 400 crore?
34. In an economy marginal propensity to consume is 0.6. What will be the change in
national income if investment increases by Rs. 50 crore?
35. In an economy, investment increases by Rs. 120 crore. The value of investment
multiplier is 4. Calculate the marginal propensity to consume.
36. In an economy, investment increases by Rs. 600 crore. If marginal propensity to
consume is 0.7, what is the increase in total national income?
37. A Rs. 200 crore increase in investment leads to a rise in national income by Rs.
1,000 crore. Find out marginal propensity to consume.
38. If the value of marginal propensity to consume is 0.25, calculate the value of
multiplier.
39. In an economy, investment increases by Rs. 10 crore and as a result income
increases by Rs. 50 crore, what is the value of multiplier?
40. If the value of MPS is 0.3, what is the value of MPC?
41. If investment multiplier is 1, what will be the value of MPC? As a result of increase in
investment by Rs. 125 crores, national income increases by Rs. 500 crores. Calculate
MPC.
42. As a result of increase in investment national income rises by Rs. 600 crores. If
marginal propensity to consume is 0.75, calculate the increase in investment.
43. If MPC is 0.9, what is the value of multiplier? How much investment is needed to
increase national income by Rs. 5000 crores? Calculate.
44. In an economy an increase in investment leads to increase in national income which
is three times more than the increase in investment. Calculate MPC.
45. If MPS is 0.2, how much new investment is required to make the national income
rise by Rs. 600 crores? Calculate.
46. Given MPS equal to 0.25, what will be the increase in national income if investment
increases by Rs. 125 crores? Calculate.
47. It is planned to increase National Income by Rs. 1000 crores. How much increase in
investment is required to achieve this goal? Assume that MPC is 0.6. Calculate.
48. It is planned to make a new investment of Rs. 1000 crores in the economy. How
much will be the increase in National Income if MPS is 0.4. Calculate.
49. An increase in investment by Rs. 400 crores leads to increase in national income by
Rs. 1600 crores. Calculate MPC.
50. There is increase in investment of Rs. 100 crores in an economy. MPC is 1. What can
you say about total increase in income? Calculate.
51. There is increase in investment of Rs. 1000 crores in an economy. MPC is zero. What
is the total increase in income? Calculate.
52. Investment increases by Rs. 500 crores in an economy. MPS is zero. What is the
total increase in income? Calculate.
53. Investment in an economy increases by Rs. 1000 crores. Suppose MPS is zero. What
can you say about increase in national income? Calculate.
54. Investment in an economy increases by Rs. 400 crores, MPC is zero. Calculate the
change in national income.
55. Investment in an economy increases by Rs. 700 crores. Suppose MPS is 1. Calculate
increase in national income.
56. How much additional income will be generated in an economy with an additional
investment of Rs. 100 crores and when half of increase in income is spent on
consumption?
57. What is the value of MPC, if an additional investment of Rs. 40 crores leads to an
increase of Rs. 100 crores in the income?
58. In an economy, investment increases by Rs. 200 crores. As a result, the total income
increases by Rs. 1,000 crores. Calculate the MPC.
59. Due to an increase in investment, the national income increased by Rs. 10,000
crores. If 20%of additional income is saved, calculate the increase in investment.
60. In an economy, marginal propensity to consume is 0.75. If investment expenditure
is increased by Rs. 500 crores, calculate the total increase in income and
consumption expenditure.
61. An increase of Rs. 200 crore in investment leads to a rise in national income by Rs.
1000 crores. Find out marginal propensity to consume.
62. As a result of increase in investment by Rs. 125 crores, national income increase by
Rs. 500 crores. Calculate marginal propensity to consume.
63. As a result of increase in investment, national income rises by Rs. 600 crores. If
marginal propensity to consume is 0.75, calculate the increase in investment.
64. If marginal propensity to consume is 0.9, what is the value of multiplier? How much
investment is needed, if national income increases by Rs. 5,000 crores?
65. An increase of Rs. 250 crores in investment in an economy resulted in total increase
in income of Rs. 1,000 crores. Calculate the following: (a) Marginal propensity to
consume (MPC), (b) Change in Savings, (c) Change in consumption expenditure, (d)
Value of multiplier.
66. In an economy, income increases by 10,000 as a result of a rise in investment
expenditure by 1,000. Calculate: (a) Investment Multiplier; (b) Marginal Propensity
to Consume.
67. In an economy, income generated is four times the increase in investment
expenditure. Calculate the values of MPC and MPS?
68. In an economy, the marginal propensity to consume is 0.8. If the investment
increases by Rs. 1,000 crores, calculate the total increase in income.
69. If MPS = 1/3 and ∆I = 600 crores, find the, value of (i) ∆Y, (ii) ∆C and (iii) ∆S.
70. In an economy autonomous investment is Rs. 400 crores and consumption function
is as under. C = 100 + 0.80Y
i) What will be the equilibrium level of income?
ii) What will be the increase in national income if investment increases by Rs. 30
crores?
71. If an increase of Rs. 10,000 in investment in an economy results in an increase in
income of Rs. 40,000. Calculate MPS in the economy.
72. In an economy, the level of income is Rs. 2000 crores and MPC is 0.75. Calculate
total increase in income if investment increases by 200 crores.
73. In an economy the actual level of income is Rs. 500 crs. whereas, full employment
level of income is Rs. 800 crs. The MPC is 0.75. Calculate the increase in investment
to achieve the full employment level of income.
74. If marginal propensity to save is 0.1 and increase in national income is Rs. 500
crores. Calculate increase in investment.
75. If marginal propensity to consume is 0.9 and increase in investment is Rs. 100
crores, find out increase in national income.
76. If marginal propensity to consume is 0.8 and total increase in national income is Rs.
500 crores. Find out increase in investment.
77. An increase of Rs. 250 crores in investment in an economy resulted in total increase
in income of Rs. 1000 crores, calculate the following:
i) Marginal propensity to consume
ii) Change in savings
iii) Change in consumption expenditure
iv) Value of multiplier.
78. In an economy investment increases by Rs. 600 crores. If Marginal Propensity to
consume is 0.7, what is the increase in total national income ?
79. In an economy investment rises by Rs. 120 crores. The value of investment
multiplier is 4. Calculate Marginal Propensity to consume.
80. A rise of Rs. 200 crores in investment leads to a rise in national income by Rs. 1000
crores. Find out Marginal Propensity to consume.
81. An increase in investment leads to total rise in national income by Rs. 500 crores. If
Marginal propensity to consume is 0.9. What is the increase in investment?
82. AS a result of increase in investment by Rs. 125 crores national income increases by
Rs. 500 crores. Calculate Marginal Propensity to consume.
83. If Marginal Propensity to save is 0.2, how much new investment is required to make
national income rise by Rs. 600 crores. Calculate.
84. If marginal Propensity to consume is 0.9, what is the value of Multiplier? How much
investment is needed to increase national income by Rs. 5000 crs?
85. In an economy, every time income rises, 20% rise in income is saved. Now suppose
in the same economy, investment rises by Rs. 200 crores. Calculate the following:
i) Change in income
ii) Change in consumption.
86. In an economy, every time income rises, 75 percent of a rise in income is spent on
consumption. Now suppose in the same economy investment rises by Rs. 750 crs.
Calculate the following:
i) Change in income
ii) Change in saving.
 87. There is increase in investment of Rs. 1000 crs in an economy and MPC = 0. What is
the total increase in income? Calculate.
88. Find the value of multiplier given (i) marginal propensity to consume = 1 and (ii)
marginal propensity to save = 1.
89. In an economy as a result of increase in investment by Rs. 100 crores, national
income rises by Rs. 1000 crs. Find out marginal propensity to consume.
90. If MPS is one, what will be the value of multiplier? What can you say about the
change in national income, given the change in investment?
91. In an economy investment is increased by Rs. 2000 crs. Calculate the change in total
income, if MPS = 0.25.
92. In an economy, 60% of increased income is spent on consumption. If Rs. 4 crores is
invested in a project, find out the increase in income and saving?
93. In an economy, the actual level of income is Rs. 500 crores, whereas, the full
employment level of income is Rs. 800 crores. If one-fourth of additional income is
saved, calculate increase in investment required to achieve full employment level of
income.
94. Explain the components of the equation: C = 20 + 0.90Y and construct a schedule
for consumption where income is Rs. 200, Rs. 250, Rs. 300, Rs. 350 and Rs. 400.
95. The consumption function is C = 20 + 0.9Y. The value of income (in Rs.) is given as
100, 200, 300, 400 and 500. Find out the consumption.
96. Derive the multiplier when MPC is (i) 0.90 (ii) 0.80 and (iii) 0.75.
97. Derive the multiplier when MPS is (i) 0.10 (ii) 0.20 (iii) 0.25. Using these multiplier
values, find the change in the equilibrium level of income that results from Rs. 20
crore decrease in investment.
98. In an economy, income increases by Rs. 10,000 as a result of a rise in investment
expenditure by Rs. 1,000. Calculate: (a) Investment multiplier (b) Marginal
propensity to consume.
99. Calculate APC and APS from the following schedule:
Income (Y) 100 200 300
Consumption (C) 80 120 150
100. At the income level of Rs. 5,000 crores, total savings are Rs. 1,000 crores. Calculate
APC.
101. Calculate MPC and MPS from the following schedule:
Income (Y) 100 200 300 400 500
Consumption (C) 85 160 235 310 400
102. Households save Rs. 500 crores out of an additional income of Rs. 5,000 crores.
Calculate MPC.
103. If the total income increases from Rs. 5,000 crores to Rs. 6,000 crores and savings
increase from Rs. 1,000 crores to Rs. 1,500 crores, calculate MPC.
104. If MPS is 0.3 and the income increases from Rs. 6,000 crores to Rs. 9,000 crores,
what will be the additional consumption in the economy?
105. From the following schedule, compute APC, APS, MPC and MPS:
Income 200 250 300 350 400
Savings — 5 15 20 50
106. Calculate MPS and Multiplier (k) from the following data:
Income (Rs.) 100 200
 Savings (Rs.) 40 100
107. Complete the following table:
Income Saving MPC APS Ans. MPC APS
0 -12 — — —
20 -6 — —
40 0 — —
60 6 — —
108. Complete the following table:
Income Saving MPC APC Ans. MPC APC
0 -6 — — -
20 -3 — —
40 0 — —
60 3 — —
109. Complete the following table:
Income Saving MPS APS Ans. MPS APS
0 40 — —
50 70 — —
100 100 — —
150 120 — —
110. Complete the following table:
Income MPS Savings APS Ans. Savings APS
0 — -90 —
100 0.6 — —
200 0.6 — —
300 0.6 — —
Hint = S = -90 + 0.6Y
111. Complete the following table:
Income Saving MPS APC Ans. MPS APC
0 15 — —
50 50 — —
100 85 — —
150 120 — —
112. Complete the following table:
Income MPS Savings APC Ans. Savings APC
0 — 0 —
100 0.75 — —
200 0.75 — —
300 0.75 — —
113. Complete the following table:
Income Consumption MPS APSS Ans. MPS APS
0 12 — —
20 26 — —
40 40 — —
60 54 — —
114. Complete the following table. Give the consumption function.
Income Saving APC MPC Ans. APC MPC
0 -30 — —
50 -15 — —
100 0 — —
 150 15 — —
C = 30 + 0.7Y
115. Complete the following table:
Income Consumption MPC APSS Ans. Income APS
0 40 — —
— 120 0.8 —
— 200 0.8 —
— 280 0.8 —
Rules: C = 40 + 0.8Y. Put values of C and get values of Y
116. Complete the following table:
Income Saving MPC APC Ans. MPC APC
0 -20 — —
50 -10 — —
100 0 — —
150 30 — —
200 60 — —
117. Complete the following table:
Level of Income (Rs.) 400 500 600 700
Consumption Expenditure 240 320 395 465
MPC — — — —
MPS — — — —

MPC — 0.80 0.75 0.70

MPS — 0.20 0.25 0.30
118. Complete the following table:
Income Consumption MPS APS Ans. MPS APS
0 40 — —
50 70 — —
100 100 — —
150 120 — —
119. From the following schedule, compute APC, APS, MPC and MPS:
Income Savings Ans. APC APS MPC MPS
50 10
100 40
150 75
200 120
120. Calculate the value of MPS from the given table:
Income (Rs.) 100 200 300 400 500
Savings (Rs.) 15 40 70 110 160

121. The consumption expenditure and investment demand are Rs. 600 crores and Rs.
300 crores respectively, when income is Rs. 1,000 crores. Calculate: (i) AD, (ii) AS
(iii) Savings.
122. Using the equation of consumption function: C = c + b(Y), calculate consumption
expenditure at the income level of Rs. 500 crores, if autonomous consumption is Rs.
40 crores and 40% of additional income is saved.
123. With the help of saving function: S = - 20 + 0.3 (Y), calculate consumption
expenditure at the income level of Rs. 1,000 crores.
124. Determine the savings at the income level of Rs. 500 crores, if consumption function
is given as: C = 120 + 0.45Y.
125. Calculate savings, AD, AS and determine equilibrium level if investment is fixed at
Rs. 100 crores:
Income (Y) Consumption (C) Ans (Y) (C) (S) (I) AD AS
0 50
100 100
200 150
300 200
400 250
500 300
126. Suppose investment in the economy is fixed at Rs. 40 crores. The consumption
expenditure, at different levels of income, is given in the following schedule:

Income (Y) Consumption (C) Ans. (Y) (C) (S) (I) AD AS

200 220
300 300
400 380
500 460
600 540
700 620
On the basis of the given schedule, Answer the following questions:
i) Calculate AD and AS for all level of income;
ii) At what level of income will the economy be at equilibrium?
iii) State the level of income where total savings are negative.
iv) Are savings and investment equal at the equilibrium level of income?
v) Calculate MPC and MPS, when the income increases from Rs. 400 crores to Rs.
500 crores.
vi) What will be the AD at the income level of Rs. 300 crores?
127. Calculate MPC and Multiplier (k) from the following data:
Income 100 200 300
Consumption 80 160 250
128. Calculate AD, AS for every level of income and the equilibrium level, from the
following schedule: (assuming that the investment is fixed at Rs. 40 crores)
Income 100 200 300 400 500 600
Consumption 120 200 280 360 440 520

129. Calculate aggregate demand (AD), aggregate supply (AS) for all levels and the
equilibrium level of income from the given schedule, if the investment is fixed at Rs.
20 crores:
Income 0 10 20 30 40 50 60 70 80 90 100
Consumption 20 25 30 35 40 45 50 55 60 65 70

Typical questions
130. Using the consumption function: C = c + b(Y), calculate saving at income of Rs.
2,000 crores, if autonomous consumption is Rs. 150 crores and 40% of additional
income is consumed.
131. The saving function is given as: S = - 200 + 0.4 (Y), calculate consumption
expenditure when income in the economy is Rs. 5,000 crores
132. The consumption function of an economy is given as: C = 40 + 0.7Y. Calculate the
savings at the income level of Rs. 2,200 crores.
133. The saving function is given as: S = - 120 + 0.5Y. Draw a diagram showing saving
corresponding to income levels of 0, 200, 400, 600 and 800.
134. The consumption function of an economy is given as: C = 40 + 0.8Y. Calculate the
total increase in income and consumption if investment expenditure increases by Rs.
500 crores.
135. In a two-sector economy, the income and consumption functions are as follows: C =
50 + 0.80Y. If the investments are Rs. 50 crores, calculate: (a) Equilibrium level of
income; (b) Level of consumption at equilibrium; (c) Savings at equilibrium.
136. The function of savings (S) is given to be: S = - 40 + 0.25Y. If planned investments
are Rs. 100 crores, determine: (a) Equilibrium level of income; (b) Level of
consumption at equilibrium; (c) Savings at equilibrium.
137. The saving function of an economy is given as: S = - 50 + 0.4Y. The economy is in
equilibrium at the income level of Rs. 1,500 crores. Calculate: (a) Investment at
equilibrium income level; (b) Autonomous consumption; (c) Multiplier.
138. The consumption function is expressed as: C = 100 + 0.25Y. Calculate savings if
consumption expenditure at equilibrium level of national income is Rs. 500 crores.
139. The consumption function of an economy is given as: C = 200 + 0.75Y, If planned
investments are Rs. 500 crores, calculate equilibrium level of national income.
140. In an economy, C = 500 + 0.9y and I = 1000 (where C = consumption, Y = income,
I= investment). Calculate the following:
 Equilibrium level of income
 Consumption expenditure at equilibrium level of income.
141. In an economy, every time income rises, 75 percent of the rise in income is spent on
consumption. Now suppose in the same economy investment rises by Rs. 750
crores. Calculate the following: (i) Change in income (ii) Change in saving.
142. In an economy, C = 300 + 0.5y and I = Rs. 600 crore (where C = consumption, y=
income, I = investment). Calculate the following: (i) Equilibrium level of income (ii)
Consumption expenditure at equilibrium level of income.
143. In an economy, every time income rises, 20 percent of rise in income is saved. Now
suppose in the same economy investment rises by Rs. 200 crores. Calculate the
following: (i) Change in income (ii) Change in consumption.
144. In an economy, C = 1000 + 0.5Y and I = 2000. Calculate the following: (i)
Equilibrium level of income (ii) Savings at equilibrium level of income.
145. In an economy, every time income rises, 60 percent of rise in income is spent on
consumption. Now suppose in the same economy investment rises by Rs, 600
crores. Calculate the following: (i) Change in income (ii) Change in saving.
146. In an economy, C = 300 + 0.8Y and I = 500. Calculate the following: (i) Equilibrium
level of income (ii) Consumption expenditure at equilibrium level of income.
147. In an economy, with every increase in income, 10 percent of the rise in income is
saved. Suppose a fresh investment of Rs. 120 crores takes place in the economy.
Calculate the following: (i) Change in the income (ii) Change in consumption.
148. In an economy, C = 50 + 0.75Y and I = Rs. 800 crores. Calculate the following: (i)
Equilibrium level of income (ii) Consumption expenditure at equilibrium level of
income.
149. In an economy, with every increase in income, 70 percent of the increased income is
spent on consumption. Suppose a fresh investment of Rs. 300 crores takes place in
the economy. Calculate the following: (i) Change in the income (ii) Change in saving.
150. In an economy, C = 100 + 0.9y and I = 700 crores. Calculate the following: (i)
Equilibrium level of income (ii) Consumption expenditure at equilibrium level of
income.
151. In an economy, with every increase in income, 15 percent of the increased income is
saved. Suppose a fresh investment of Rs. 600 crores takes place in the economy.
Calculate the following: (i) Change in income (ii) Change in consumption.
152. Given consumption function C = 100 + 0.75Y and investment expenditure Rs. 1000,
calculate: (i) Equilibrium level of national income. (ii) Consumption expenditure at
equilibrium level of national income.
153. In an economy S = - 50 + 0.5Y is the saving function and investment expenditure is
7000. Calculate: (i) Equilibrium level of national income. (ii) Consumption
expenditure at equilibrium level of national income.
154. From the following information about an economy, calculate: (i) equilibrium level of
national income, and (ii) savings at equilibrium level of national income.
Consumption function: C = 200 + 0.9Y, Investment expenditure: I = 3000.
155. C = 100 + 0.75Y is a consumption function and investment expenditure is 800. On
the basis of this information calculate: (i) Equilibrium level of national income (ii)
Savings at equilibrium level of national income.
156. Given below is the consumption function in an economy: C = 100 + 0.5Y. With the
help of a numerical example, show that in this economy as income increases APC
will decrease.
157. The savings function of an economy is S = - 200 + 0.25Y. The economy is in
equilibrium when income is equal to 2,000. Calculate:- (i) Investment expenditure at
equilibrium level of income. (ii) Autonomous consumption
158.
159. Suppose that consumption equals: C = 40 + 0.75Y, investment equals: I = Rs. 60
and Y= C + I, Find
 The equilibrium level of income,
 The level of consumption at equilibrium and
 The level of saving at equilibrium
160. In a two-sector economy, the consumption and investment functions are as follows:
C = 50 + 0.8Y; I = 50 Find (i) the equilibrium level of income; (ii) the level of
consumption at equilibrium and (iii) the level of saving at equilibrium.
161. In a two-sector economy, the saving and investment functions are:
S = - 10 + 0.2Y; I = -3 + 0.1Y
What will be the equilibrium level of income?
162. In an economy C = 100 + 0.9Y and I = 700 (where C - consumption and Y =
Income, I = Investment}. Calculate the following:
 i) Equilibrium level of income.
ii) Consumption expenditure at equilibrium level
163. In an economy C = 300 + 0.8 Y and I = 500 (where C = consumption I =
Investment and Y = level of income). Calculate the following:
i) Equilibrium level of income.
ii) Consumption expenditure at equilibrium level of income.
164. In an economy C = 500 + 0.9 Y and I = 1000, where C = consumption, Y = income,
I = Investment). Calculate the following:
i) Equilibrium level of income.
ii) Consumption expenditure at equilibrium level
165. From the following information about an economy, calculate
i) its equilibrium level of national income, and
ii) Savings at equilibrium level of national income.
Consumption function: C = 200 + 0.9 Y (where C = consumption expenditure and Y
= national income) investment expenditure: I = 3000.
166. In an economy S = - 50 + 0.5 Y is the saving function (where S = saving and Y =
national income) and investment expenditure is 7000. Calculate:
i) Equilibrium level of national income.
ii) Consumption expenditure at equilibrium level of national income.
167. In an economy the consumption function C = 600 + 0.9 Y, where C is consumption
expenditure and Y is income. Calculate equilibrium level of income and consumption
expenditure when investment expenditure is Rs. 500.
 Numerical questions on Govt. budget

1. Calculate: (a) Revenue Deficit, (b) Fiscal Deficit, and (c) Primary Deficit.
Items Rs. (in crores)
(i) Revenue receipts 200
(ii) Revenue expenditure 300
(iii) Capital receipts 160
(iv) Capital expenditure 60
(v) Recoveries of loans and other receipts 30
(vi) Borrowings and other liabilities 130
(vii) Interest payments 90
(Ans. (a) Revenue Deficit = Rs. 100 crores; (b) Fiscal Deficit = Rs. 130 crores. (c)
Primary Deficit = Rs. 40 crores)

2. A government shows primary deficit of Rs. 4,400 crores. The revenue expenditure as
interest payment in Rs. 400 crore. How much is the fiscal deficit? (Ans. Fiscal Deficit
= Rs. 4,800 crores)

3. The following figures are based on budget estimates of Government of India for the
year 2001-2002
Items Rs. (in billions)
a) Revenue receipts 2,31,745
i) Tax Revenue 1,63,031
ii) Non-tax revenue 68,714
b) Capital receipts 1,43,478
i) Recoveries of Loans 15,164
ii) Other receipts
(mainly PSU disinvestment) 12,000
iii) Borrowings and other liabilities. 1,16,314
c) Revenue expenditure 3,10,566
i) Interest payments 1,12,300
ii) Major subsidies 27,845
iii) Defence expenditure 1,70,421
d) Capital expenditure 64,657
e) Total expenditure 3,75,223
i) Plan expenditure 1,00,100
ii) Non-plan expenditure 2,75,123
Calculate (a) Fiscal deficit (b) Revenue deficit and (c) Primary deficit
(Ans. (a) Fiscal deficit = Rs. 1,16,314 billions (b) Revenue deficit = Rs. 78,821
billions. (c) Primary deficit = Rs. 4,014 billions)

4. From the budget estimates of Government of India for the year 2000-2001,
Calculate:
(a) Revenue deficit (b) Fiscal deficit and (c) Primary deficit:
Items Rs. (in crores)
 i) Revenue Receipts 2,035
ii) Revenue Expenditure 2,811
iii) Capital receipts 1,343
iv) Capital Expenditure 574
v) Recoveries of loans and other receipts 230
vi) Borrowing and other liabilities 1,113
vii) Interest payments 1,000
(Ans. = (a) Revenue deficit = Rs. 776 crores (b) Fiscal deficit = Rs. 1,120 crores (c)
Primary deficit = Rs. 120 crores)

5. Following the budget of a govt. for the year 2008-09. Calculate: (a) Revenue deficit
(b) Fiscal deficit.

1. Revenue Receipts 6,02,935

2. Capital Receipts (2a + 2b + 2c)
2a. Recoveries of loans 4,497
2b. Other receipts 10,165
2c. Borrowing and other liabilities 1,33,287 1,47,949
3. Total Receipts (1 + 2) 7,50,884
4. Plan Expenditure (4a + 4b)
4a. On revenue account
2,09,767
4b. On capital account 33,619 2,43,386
5. Non-Plan Expenditure (5a + 5b)
5a. On Revenue Account
4,48,352
(It includes interest payment of Rs. 1,90,807
crores)
5b. On Capital Account 5,07,498
59,146
6. Total Expenditure (4 + 5) 7,50,884
(Ans. - Revenue Deficit= (4a + 5a)-(1) = Rs. 55,184 Crores, Fiscal Deficit = (4 + 5) - (1 +
2a + 2b)
= Rs. 1,33,287 Crores)

6. The following figures are based on budget estimates of Government of India for the
year 2003-2004
Item Amount (Rs. in crores)
1. Revenue Receipts 245105
a. Tax revenue 172965
b. Non-tax revenue 72140
2. Capital Receipts 165204
a. Recovery of loans 17680
b. Other receipts (mainly PSU disinvestments) 12000
c. Borrowings and other liabilities 135524
3. Revenue Expenditure 340482
 a. Interest payments 117390
b. Major subsidies 38923
c. Defence expenditure 43589
4. Capital Expenditure 69827
5. Total Expenditure 410309
a. Plan expenditure 113500
b. Non-plan expenditure 296809
(Ans. = Fiscal Deficit – 135524, Revenue Deficit – 95377, Primary deficit - 18134)

7. Find budget deficit from the following data.

Items Rs. (in crores)
i) Revenue receipts 40,000
ii) Revenue expenditure 30,000
iii) Capital receipts 30,000
iv) Capital expenditure 50,000
(Ans. = Budget deficit = Total expenditure – Total receipts = 10000 crores)