Calculate change in final income, if Marginal Propensity to ...

CBSE 2019 Class 12 Economics Outside Delhi Set 1

Question : 6

Total: 24

Calculate change in final income, if Marginal Propensity to Consume (MPC) is 0.8 and change in initial investment is ₹1,000 crores.

Solution:

MPC =0.8 and change in initial investment =₹ 1000 crores
‌ Multiplier ‌‌=‌

1−MPC

=‌

1−0.8

=5
K‌=‌

‌ Change in income ‌

‌ Change in investment ‌

‌

(∆Y)

(∆I)

5‌=‌

‌ Change in income ‌(∆Y)

1000

Change in income =₹5000 crores.

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