CBSE 2020 Class 12 Economics Delhi Set 1

Question : 8 of 46

Marks: +1, -0

If Marginal Propensity to Save (MPS) is 0.25 and initial change in investment is

\₹ 250

crores, then the final change in income would be ........... .
(Choose the correct alternative).

Solution:

MPS

=0.25

Change in investment

∆ I=₹ 250

crore
Final change in income

∆ Y=

{\K}\;=\;{∆\Y}/{∆ {\I}}

{\K}\;=\;{1}/{m p s}

\;=\;{1}/{0.25}

{\K}\;=4

∆ {\Y}\;= {\K} × ∆ {\I}

\;=4 × 250 \;\text " crores "\;

∆ {\Y}\;=1,000 \;\text " crores "\;

Change in income

∆ Y=1,000

crores
(a)

₹ 1,000

crores

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