CBSE 2019 Class 12 Economics Delhi Set 2

Question : 1

Total: 3

SECTION-B

(Macro-economics)

If in an economy :
Change in initial investment (∆I)=₹700 crores Marginal Propensity to Save (MPS) =0.2
Find the values of the following:
(a) Investment Multiplier (k)
(b) Change in final income (ΔY)

Solution:

(a) Change in initial investment (∆I)=₹700 crores
Marginal propensity to save ( MPS) =0.2
Investment multiplier (k)=‌

MPS

‌=‌

0.2

K‌=5
(b) Change in final income (∆Y)
K=‌

∆Y

∆I

∆Y‌=K×∆I
‌=5×700
‌=₹3500‌ crores. ‌

Go to Question:

Next Question