If income increases from 3,000 to 4,000, and autonomous investment increases by 200, the MPC should be

0.9

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0.8

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0.7

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0.6

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Solution

The correct option is B
0.8

Multiplier (M) = $\frac{Δ Y}{Δ A}$

= $\frac{(4000 - 3000)}{200}$

= 5

MPS = $\frac{1}{M}$ = 0.2

Therefore, MPC = 1 - MPS = 0.8

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Similar questions

If investment increases from 400 to 600 and income increases from 3,000 to 4,000, the MPS should be equal to

Autonomous increase in investment always causes an autonomous increase in income.

Calculate Investment expenditure:

National income = 700

Autonomous consumption = 70

MPC = 0.8

Calculate equilibrium level of income from the following:

Consumption expenditure at zero level of income = 60

MPC = 0.9

Investment =100

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