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In an economy, investment expenditure is increased by 700 crore and MPC is 0.9. Calculate total increase in income and consumption expenditure |
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Answer» Solution :`K=(1)/(1-MPC)=(1)/(1-0.9)=(1)/(0.1)=(1)/(1//10)=10` Total INCREASE in income=Increase in investment`xxK` =`700xx10=7000crore` Total increase in consupmtion expenditure=0.9 of 7000 `=(9)/(10)=7000=6300crore` |
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