What is the difference between ex ante investment and ex post investment?

Introductory Macroeconomics

Book: Introductory Macroeconomics

Chapter: 4. Income Determination

Subject: Social Science - Class 12^th

Q. No. 2 of Exercises

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2

What is the difference between ex ante investment and ex post investment?

Ex ante investment is the planned investment and ex post investment is the actual investment.

Planned investment is investment which is desired to be made by firms and planners in economy during the year whereas actual or realised investment is the investment made during that period.

According to Keynes investment in inventory of unsold goods is unplanned investment so actual investment is the sum of planned and unplanned investment.

Unplanned investment is that investment which was not included in planned investment.

2

1

What is marginal propensity to consume? How is it related to marginal propensity to save?

2

What is the difference between ex ante investment and ex post investment?

3

What do you understand by ‘parametric shift of a line’? How does a line shift when its
(i) slope decreases, and (ii) its intercept increases?

4

What is ‘effective demand’? How will you derive the autonomous expenditure multiplier when price of final goods and the rate of interest are given?

5

Measure the level of ex-ante aggregate demand when autonomous investment and consumption expenditure (A) is Rs 50 crores, and MPS is 0.2 and level of income (Y) is Rs 4000 crores. State whether the economy is in equilibrium or not (cite reasons).

6

Explain ‘Paradox of Thrift’.