1.

in an economy ,MPC is 0.75 if investment expenditure is increased by Rs. 500 Crore , calculate total increase in income and consumption experditure .

Answer» `K=(1)/(1-MPC)=(1)/(1-0.75)=(1)/(0.25)=(1)/(1//4)=4`
total increase in income
= increase in investment `xx` K
`=500xx4`
`Rs. 2,000` crore
total increase in consumption expendityre
`= 0.75 " of" 2,000`
`= 1,500` crore .


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