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CBSE 2019 Class 12 Economics Outside Delhi Set 2

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Question : 1 of 5
Marks: +1, -0
SECTION - B
(MACRO-ECONOMICS)
Estimate the change in initital investment if Marginal Propensity to Save (MPS) is 0.10 and change in final income is ₹ 15,000\text{₹}\,15,000 crores.
Solution:  
  MPS    =0.10\;\text{MPS}\;\;=0.10
  Change in Income    =₹ 15,000  crores  \;\text{Change in Income}\;\;= \text{₹}\,15,000 \;\text{crores}\;
  Multiplier  (K)  =  1MPS\;\text{Multiplier}\;(K)\;=\;\frac{1}{\text{MPS}}
  =  10.10\;=\;\frac{1}{0.10}
  =10\;=10
K  =    Change in income  ΔY  Change in investment  ΔI.K\;=\;\frac{\;\text{Change in income}\; \Delta Y}{\;\text{Change in investment}\; \Delta I}.
10  =  15,000  Change in investment  10\;=\;\frac{15,000}{\;\text{Change in investment}\;}
Change in investment =₹ 1500= \text{₹}\,1500 crores.
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