CBSE 2022 Class 12 Economics Outside Delhi Set 1 (Term 2)

On the basis of following schedule, answer the given questions:

Question : 4 of 19

Marks: +1, -0

In an economy 75 percent of the increase in income is spent on consumption. Investment increased by

₹ 1,000

crore.
Calculate the total increase in income on the basis of given information.

Solution:

{\MPC}\;=75 \%=0.75

∆ {\I}\;=1,000

∆ {\Y}\;=?

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

\;=\;{1}/{1-0.75}=\;{1}/{0.25}=4

{\K}\;=\;{∆ {\Y}}/{∆ {\I}}

4\;=\;{∆ {\Y}}/{1000}

4 × 1000\;=∆ Y

\₹ 4,000\;=∆ Y

Thus, the increase in income

=\₹ 4,000

crores

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