in a ecoonomy, increase in investment by 400crores,national income raise by 2000crores.find the mps
We know,
Multiplier = (change in income)/ (change in investment)
= 2000/400 = 5
Now,
Multiplier = 1/MPS
⇒5 = 1/MPS
⇒MPS = 1/5 = 0.2
In an economy, the ratio of MPC and MPS is 7:3. How much increase in income will increase the consumption by Rs 350 crores?
OR
In an economy, C = 300 + 0.5 Y and investment is 600. What will be the equilibrium level of income and consumption?