CBSE 2016 Class 12 Economics Delhi Set-2

Question : 1

Total: 3

SECTION-B

(Macro-economics)

Suppose marginal propensity of consume is 0.8 . How much increase in investment is required to increase national income by ₹2000 crore? Calculate.

Solution:

Marginal propensity to consume (MPC)=0.8
Change in income =₹2000 crore
k‌=1∕1−MPC
‌=1∕1−0.8=1∕0.2=5
k‌=∆Y÷∆I
5‌=2000÷∆I
5∆I‌=2000
∆I‌=‌

2000

∆I‌=400‌ crores ‌

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