Question

If in an economy : change in initial investment = 1200 crore
Marginal propensity to save =0.2
Find the value of : a.investment multiplier B. Change in final income

Answer 1

Answer:

6000

Explanation:

K= 1/MPS

K= 1/0.2

K = 5

K = ∆Y/∆I

5 = ∆Y/ 1200

∆Y = 6000