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SECTION-B
Suppose marginal propensity of consume is0 . 8 . How much increase in investment is required to increase national income by ₹ 2000 crore? Calculate.
(Macro-economics)
Suppose marginal propensity of consume is
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 =
∆ I = 400 crores
Change in income
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