Question

In an economy, investment increases by RS 100 cr, as a result income increases by RS 250cr. what is the value of the multiplier?
What does it imply?​

Answer 1

Answer:

I don't know the exact answer but I have given the the similar questions and answer. Hope it will help you.

Explanation:

Question = In an economy, Investment increases by Rs. 200 crores. As a result, the total income increases by 1,000 crores. Calculate the MPC. (0.80)

Answer = Marginal Propensity to consume refers to the percentage change in consumption for every one rupee of change in the income. It is the ratio between the change in income and corresponding change in consumption.

Multiplier(k) => Change in income / change ininvestment = 1/ (1-MPC)

=> 1000/200 = 1/(1- MPC)

=> 10 - 10 MPC = 2

=> 10 MPC = 8

=> MPC = 0.8.