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CBSE 2020 Class 12 Economics Delhi Set 1

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Question : 8 of 46
Marks: +1, -0
If Marginal Propensity to Save (MPS) is 0.25 and initial change in investment is ₹250\text{₹} 250 crores, then the final change in income would be ........... .
(Choose the correct alternative).
Solution:  
MPS =0.25=0.25
Change in investment ∆I=₹250∆ I=\text{₹} 250 crore
Final change in income ∆Y=∆ Y= ?
K  =  ∆Y∆IK\;=\;\frac{∆Y}{∆ I}
K  =  1mpsK\;=\;\frac{1}{m p s}
  =  10.25\;=\;\frac{1}{0.25}
K  =4K\;=4
∆Y  =K×∆I∆ Y\;= K \times ∆ I
  =4×250   crores   \;=4 \times 250 \;\text{ crores }\;
∆Y  =1,000   crores   ∆ Y\;=1,000 \;\text{ crores }\;
Change in income ∆Y=1,000∆ Y=1,000 crores
(a) ₹1,000\text{₹} 1,000 crores
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