CBSE 2019 Class 12 Economics Outside Delhi Set 3

Question : 1 of 4

Marks: +1, -0

SECTION - B

(MACRO-ECONOMICS)

Estimate the change in final income if Marginal Propensity to Consume(MPC) is 0.75 and change in initial investment is

₹ 2,000

crores.

Solution:

{\MPC}=0.75

Change in investment

=₹ 2000

crores

\;\text " Multiplier "\;\;=\;{1}/{1- {\MPC}}

\;=\;{1}/{1-0.75}=4

{\K}\;=\;{\;\text " Change in income "\; ∆ {\Y}}/{\;\text " Change in investment "\; ∆ I .}

⇒ \;\; 4\;=\;{\;\text " Change in income "\;}/{2000}

Change in income

=₹ 8000

crores

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