If MPC = 0.75, how much …
CBSE, JEE, NEET, CUET
Question Bank, Mock Tests, Exam Papers
NCERT Solutions, Sample Papers, Notes, Videos
Related Questions
Posted by Rijum Karlo 10 months, 3 weeks ago
- 0 answers
Posted by Naman Jain 9 months, 4 weeks ago
- 1 answers
Posted by Dipika Sharma 10 months, 2 weeks ago
- 0 answers
Posted by Niyati Garg 9 months, 3 weeks ago
- 0 answers
Posted by Jaya Anand 10 months, 1 week ago
- 0 answers
Posted by Megha Gaur 10 months ago
- 0 answers
Posted by Mehar Ansari 10 months, 3 weeks ago
- 0 answers
myCBSEguide
Trusted by 1 Crore+ Students
Test Generator
Create papers online. It's FREE.
CUET Mock Tests
75,000+ questions to practice only on myCBSEguide app
Gaurav Seth 4 years, 10 months ago
Investment multiplier refers to the number of time by which the increase in output or income exceeds the increase in investment. It is measured as the ratio between change in income and change in investment and it is denoted as 'k'.
Multiplier(k) => Change in income / change in investment = 1/ {1-MPC(c)} where c is the marginal propensity to consume
If MPC = 0.75 and change in income is Rs. 600 crores, then
Multiplier(k) => 600 / change in investment = 1/ {1-MPC(c)}
=> 600 / change in investment = 1/ 1- 0.75
=> 600 / change in investment = 1/ 0.25
=> 600 / change in investment = 4
=> change in investment = 600 / 4 = 150 crores rupees.
Therefore, additional investment is of Rs. 150 crores.
1Thank You