Question

ultiplier when change in
2
Explain the working of multiplier
is Rs. 150 crore and the
investment in the economy is Rs. 150 crore
ate the total change in income
MPC is 0.50. Also estimate the total chang
and value of multiplier.
(1)
Given the following data for an economy
C = Rs. 500 + 0.75Y, crore
I = Rs. 200 crore
G = Rs. 300 crore
T = Rs. 100 crore​

Answer 1

Answer:

Explanation:

There is a relationship between the MPC (Marginal Propensity to Consume) and Multiplier (K).

The Multiplier (K) can be defined as the ratio of the change in case of National Income to change in the Government spending which cause it.

MPC can determine the value of the multiplier.

Higher the MPC, higher its multiplier.