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The Multiplier Mechanism

If the value ...

Question

If the value of the multiplier is 4, what will be the effect on the income of an economy if investment increases by Rs 100 crore?

A

Income will not change

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B

Income will decrease by Rs 400 crore.

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C

Income will increase by Rs 400 crore.

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D

Income will increase by Rs 500 crore.

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Solution

The correct option is C
Income will increase by Rs 400 crore.

Income will increase by Rs 400 crore.

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