Estimate the value of Aggregate Demand in an economy if:

a) Autonomous Investment (I) = Rs. 100 Crore.

b) Marginal Propensity to Save (MPS) = 0.2

c) Level of Income (Y) = Rs. 4,000 crores.

d) Autonomous Consumption Expenditure (c) = Rs. 50 Crore

OR

In an economy, C= 200+ 0.5 Y is the consumption function where C is the consumption expenditure and Y is the national income. Investment expenditure is Rs. 400 crores. Is the economy in equilibrium at an income level Rs. 1500 crores? Justify your answer.

_______ (choose the correct alternative) is a revenue receipt of the government.

a) Funds raised by the government by issuing National Saving Certificates

b) Sale of 40% shares of a public sector undertaking to a private enterprise

c) Profits of LIC, a public enterprise

d) The amount borrowed from Japan for construction of Bullet Train

Identify which of the following statements is true?

a) The fiscal deficit is the difference between planned revenue expenditure and planned revenue receipts

b) Fiscal deficit is the difference between total planned expenditure and total planned receipts

c) Primary deficit is the difference between total planned receipt and interest payments.

d) The fiscal deficit is the sum of the primary deficit and interest payment.

Explain how the level of effective demand is attained in an economy if, Aggregate Demand is more than the Aggregate Supply.

What is meant by the problem of double counting? How this problem can be avoided?

OR

Discuss briefly, the circular flow of income in a two-sector economy with the help of a suitable diagram.