Q17 of 36 Page 1

If in an economy :

Change in initial investments (∆I) = ` 700 crores


Marginal Propensity to Save (MPS) = 0.2


Find the values of the following :


(a) Investment Multiplier (k)


(b) Change in final income (∆Y)


K=1/MPS

K=1/0.2


K=5


Change in income = K * Change in investment


= 5*700


=Rs3500 crore


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