Test Index

CBSE 2019 Class 12 Economics Outside Delhi Set 3

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Question : 1 of 4
Marks: +1, -0
SECTION - B
(MACRO-ECONOMICS)

Estimate the change in final income if Marginal Propensity to Consume(MPC) is 0.75 and change in initial investment is ₹2,000 crores.
Solution:  
MPC=0.75
Change in investment =₹2000 crores
‌ Multiplier ‌‌=‌
1
1−MPC
‌=‌
1
1−0.75
=4
K‌=‌
‌ Change in income ‌∆Y
‌ Change in investment ‌∆I.
⇒‌‌4‌=‌
‌ Change in income ‌
2000
Change in income =₹8000 crores
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