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12th Class Economics Solved Paper - Economics 2016 Delhi Set-III

  • question_answer
    Suppose marginal propensity to consume is 0.8. How much increase in investment is required to increase national income by Rs. 2000 crore? Calculate.

    Answer:

    Marginal propensity to consume (MPC) = 0.8
    Change in income = Rs. 2000 crore
                            \[k=1/1MPC\]
                            \[=1/10.8=1/0.2=5\]
                            \[k=\Delta Y\div \Delta I\]
                            \[5=2000\div \Delta I\]
                            \[5\Delta I=2000\]
                            \[\Delta I=2000/5\]
                            \[\Delta I=400\,\,crores\]
     


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