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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\text{₹ }2,000 crores.
Solution:  
MPC=0.75\mathrm{MPC}=0.75
Change in investment =₹ 2000=\text{₹ }2000 crores
 Multiplier   =  11−MPC\text{ Multiplier }\;=\;\frac{1}{1-\mathrm{MPC}}
  =  11−0.75=4\;=\;\frac{1}{1-0.75}=4
K  =     Change in income   ΔY   Change in investment   ΔI.\mathrm{K}\;=\;\frac{\;\text{ Change in income }\; \Delta Y}{\;\text{ Change in investment }\; \Delta I}.
⇒    4  =     Change in income   2000\Rightarrow\;\;4\;=\;\frac{\;\text{ Change in income }\;}{2000}
Change in income =₹ 8000=\text{₹ }8000 crores
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