In an economy, 20 percent of increased Income is saved. How much will be the increase in Income if investment Increases by 10,000? Calculate.
(Increase in Income = 50,000)

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Solution

If 20 % of the income is save then MPS =0.2.
Multiplier(k) => Change in income / change in investment = 1/ MPS

=> change in income/ 10,000 = 1/0.2

=> change in income/ 10,000 = 5

=> change in income = 5 * 10,000 = 50,000
Hence, national income is increased by 50,000.

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In an economy, 20 percent of increased Income is saved. How much will be the increase in Income if investment Increases by 10,000? Calculate. (Increase in Income = 50,000)

If 20 % of the income is save then MPS =0.2.Multiplier(k) => Change in income / change in investment = 1/ MPS => change in income/ 10,000 = 1/0.2 => change in income/ 10,000 = 5 => change in income = 5 * 10,000 = 50,000Hence, national income is increased by 50,000.

In an economy, 20 percent of increased Income is saved. How much will be the increase in Income if investment Increases by 10,000? Calculate.
(Increase in Income = 50,000)

If 20 % of the income is save then MPS =0.2.
Multiplier(k) => Change in income / change in investment = 1/ MPS

=> change in income/ 10,000 = 1/0.2

=> change in income/ 10,000 = 5

=> change in income = 5 * 10,000 = 50,000
Hence, national income is increased by 50,000.