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CBSE 2016 Class 12 Economics Delhi Set-1

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Question : 9 of 18
Marks: +1, -0
In an economy investment is increased by ₹300\text{₹} 300 crore. If marginal propensity to consume is 23\frac{2}{3} , calculate increase in national income.
Solution:  
   MPC     =23\;\text{ MPC }\;\;=\frac{2}{3}
ΔI  =₹300   crores   \Delta I\;=\text{₹} 300 \;\text{ crores }\;
k  =[1÷(1−MPC)]k\;=[1 \div (1- MPC)]
  =[1÷(1−  23)]\;= \left[1 \div \left(1-\;\frac{2}{3}\right)\right]
  11−MPC  =  11−  23\;\frac{1}{1- MPC}\;=\;\frac{1}{1-\;\frac{2}{3}}
  113  =3\;\frac{1}{\frac{1}{3}}\;=3
k  =  ΔYΔIk\;=\;\frac{\Delta Y}{\Delta I}
3  =  ΔY3003\;=\;\frac{\Delta Y}{300}
ΔY  =300×3\Delta Y\;=300 \times 3
  =₹900   crore   \;=\text{₹} 900 \;\text{ crore }\;
Increase in national income is ₹900\text{₹} 900 crore.
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