Question

If increase in investment is Rs. 50 crores and income increases from Rs. 1000 croresto Rs. 1200 crores, then find out multiplier.​

Answer 1

Answer:

Multiplier(k) => Change in income / 1,00 = 1/ (1-MPC)

=> Change in income / 1,000 = 1/ (1- 0.8)

=> Change in income / 1,000 = 1/ 0.2

=> change in income = 5 (1,000) = 5,000 crores

K= change in income/ change in investment = 5,000 /1,000 = 5 times