Question

If MPC = 0.4 and $\Delta Y=1,000,$ what will be $\Delta S$?

• A. Rs 400
• B. Rs 500
• C. Rs 600
• D. Rs 250

Answer 1

The correct option is C

Rs 600

Given, MPC = 0.4, $\Delta Y=1,000$...(1)

MPC = $\frac{\Delta C}{\Delta Y}$...(2)

Replacing values of (1) in (2), 0.4 = $\frac{\Delta C}{1000}$

$\Delta C=400$

$\Delta S=\Delta Y-\Delta C$

= 1000 - 400 = 600 Rs