Question

if increase in investment is rs.50 crores and income increase from rs. 1000 crores to rs. 1200 crores,then find out multiliper​

Answer 1

Answer:

: As given in the examination problem, Equilibrium Income (Y) = Rs 4000 crore

Autonomous Investment + Autonomous Consumption = Rs 50 crore MPS = 0.2

So, MPC(b) = 1 – 0.2 = 0.8

(MPC = 1 – MPS)

AD = C + I

AD = + bY + I = + bY

= 50 + 0.8Y

As we know, the equilibrium level of national income in two-sector model is determined where,

AS = AD

Y = 50 + 0.8Y

4000 = 50 + 0.8(4000)

4000 = 50 + 3200

4000 =3250

Hence, the economy is not in equilbrium

Step-by-step explanation: