Answer:
Increase in investment = Rs. 900 crore Marginal propensity to consume =0.6 Multiplier (K) is the ratio of increase in national Income (\[\Delta Y\]) due to increase in investment (\[\Delta I\]). \[K=\frac{\Delta Y}{\Delta I}\] Round 1 Increasein Investment Increasein Income Increasein Consumption 1 900 900 540 2 900 540 374 3 900 374 224.4 4 900 224.4 ? 5 ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? Increase in consumption = \[\frac{900\,\,\times \,\,0.6}{10}\] = 540 =\[\frac{540\,\,\times \,\,0.6}{10}\] = 374 =\[\frac{374\,\,\times \,\,0.6}{10}\] = 224.4
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