CBSE 2016 Class 12 Economics Delhi Set-3

Question : 2 of 5

Marks: +1, -0

In an economy an increase in investment by

₹ 100

crore led to 'increase' in national income by ₹ 1,000 crore. Find marginal propensity to consume.

Solution:

Given,

∆ {\I}\;=₹ 100 \;\text " crore "\;

∆ {\Y}\;=₹ 1,000 \;\text " crore "\;

{\MPC}\;=?

{\K}\;=\;{∆ {\Y}}/{∆ {\I}}

{\K}\;=\;{1}/{1- {\MPC}}

\;{1}/{1- {\MPC}}\;=\;{∆ {\Y}}/{∆ {\I}}

\;{1}/{1- {\MPC}}\;=\;{1,000}/{100}

\;{1}/{1- {\MPC}}\;=10

1\;=10-10 {\MPC}

-9\;=-10 {\MPC}

{\MPC}\;=\;{9}/{10}=0.9

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