CBSE 2019 Class 12 Economics Outside Delhi Set 3

Question : 1

Total: 4

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−MPC

‌=‌

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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