Question

In an economy , investment expenditure is increased by Rs 700 crore. The marginal propensity to consume is 0.8. Calculate the total increase in income and consumption expenditure.​

Answer 1

Answer:

3500,2800

Explanation:

K = 1 /1- MPC

k = 5

k = change in income/change in investment

5=change in income/700

change in income = 3500

mpc = change in cosumption/change in income

0.8 = change in C/3500

change in consumption = 2800