Q17 of 39 Page 1

Calculate the change in final income, if Marginal Propensity to Consume (MPC) is 0 �8 and change in initial investment is < 1,000 crores.

The marginal propensity to consume = 0.8

The change in the initial investment = Rs 1000


Multiplier K = 1/1-MPC


1/1-0.8


5


Multiplier K = change in income/ change in investment


5 = change in income/1000


Change in income = 1000*5 = Rs 5000


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