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CBSE 2016 Class 12 Economics Delhi Set-3

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Question : 2 of 5
Marks: +1, -0
In an economy an increase in investment by ₹100₹ 100 crore led to 'increase' in national income by ₹ 1,000 crore. Find marginal propensity to consume.
Solution:  
Given,
ΔI=₹100 crore\Delta I = \text{₹} 100 \text{ crore}
ΔY=₹1,000 crore\Delta Y = \text{₹} 1,000 \text{ crore}
MPC=?MPC = ?
K=ΔYΔIK = \frac{\Delta Y}{\Delta I}
K=11−MPCK = \frac{1}{1 - MPC}
11−MPC=ΔYΔI\frac{1}{1 - MPC} = \frac{\Delta Y}{\Delta I}
11−MPC=1,000100\frac{1}{1 - MPC} = \frac{1,000}{100}
11−MPC=10\frac{1}{1 - MPC} = 10
1=10−10MPC1 = 10 - 10 MPC
−9=−10MPC-9 = -10 MPC
MPC=910=0.9MPC = \frac{9}{10} = 0.9
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