1.

in aneconomy75%is increase in incomeisspentin consumption, investementis increased byRs. 1,000crore. Calculate:(a)Total increasein income(b)totalincrase in comsumptionexpenditure .

Answer»

SOLUTION :`MPC=(75)/(100)=(3)/(4) thereforeMPS =1-(3)/(4) =(1)/(4)`
`K=(1)/(MPS)=(1)/(1//4)=4`
`(a)K=(DELTAY)/(DeltaI)or4=(Delta Y) /(1000)`
or`DeltaY= 4xx1,000 =4,000`
increase in incomeis4,000crore .
(B)increasein consumption expenditure ,
`DeltaC=MPCxxDelta Y("" :' MPC=(DeltaC)/(DeltaY))`
`=(3//4)xx4,000`
`=3,000` CRORE


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