Question

if investment increases from 250 to 370 and income increases from 1800 to 3000. what will be the MPS
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Answer 1

Answer:

500 crores

Explanation:

If investment increases by 125 crores and MPS= 0.25, then

Multiplier(k) => Change in income / 125= 1/ MPS

=> Change in income / 125 = 1/0.25

=> Change in income / 125 = 4

=> change in income = 4(125) = 500 crores.

Hence, National income increases by 500 crores.