Question

if increase in investment is rupees 50 crore and income increase from re 1000cr to 1200 cr than find out multiplier

Answer 1

Answer:

Here's what I found 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 equilibrium

Answer 2

Hey mate ,

here is your answer

Multiplier (k) = CHANGE IN INCOME /  CHANGE IN INVESTMENT

SO YOUR CORRECT ANSWER IS :-

CHANGE IN  INVESTMENT =50

CHANGE IN INCOME =  1200 cr - 1000 cr = 200

SO, 200 / 50 = 4 IS YOUR ANSWER  

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