Question

in an economy the MPC is 0.8 if the investment increased by 1000 crore calculate the total increase in income​

Answer 1

$\bf\underline{Determination \:of \:Income \:and}$ $\bf\underline {Employment}$

$\bf{M.P.C.}$ stands for $\bf{Marginal \:Propensity \:to \:Consume,}$ which shows change in consumption due to change in income.

$\boxed {Solution :-}$

$\bf {MPC = 0.8}$

$\bf {Change \:in \:Investment = (+) 1000}$

$\bf {Change \:in \;Income = ?}$

$\small {Kindly \: refer \: to \: the \: attachment!}$

$\bf\underline{Investment \: Multiplier \:(K)}$ is used to calculate change in Investment and Income in an economy. It has two formulas :-

1.) K = 1/ MPS "or" 1/1-MPC

2.) K = Change in Y / Change in I

Answer 2

\bf{M.P.C.}M.P.C. stands for \bf{Marginal \:Propensity \:to \:Consume,}MarginalPropensitytoConsume, which shows change in consumption due to change in income.

\boxed {Solution :-}

Solution:−

\bf {MPC = 0.8}MPC=0.8

\bf {Change \:in \:Investment = (+) 1000}ChangeinInvestment=(+)1000

\bf {Change \:in \;Income = ?}ChangeinIncome=?

\small {Kindly \: refer \: to \: the \: attachment!}Kindlyrefertotheattachment!

\bf\underline{Investment \: Multiplier \:(K)}

InvestmentMultiplier(K)

is used to calculate change in Investment and Income in an economy. It has two formulas :-

1.) K = 1/ MPS "or" 1/1-MPC

2.) K = Change in Y / Change in I