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Preeti Dabral 4 years, 8 months ago
If the MPS= 0.25 and investment is increased by Rs. 200 crores.
Multiplier(k) => Change in Income / 200 = 1/ MPS
=> Change in Income / 200 = 1/0.25
=> Change in Income / 200 = 4
=>Change in Income = 4*200 = 800 crores
Consumption at equilibrium level of income,
Income= Consumption+ Investment
=> Y= C+I
=> C= Y-I
=> C = 800-200
= 600 crores
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Nitesh Dhillod 5 years ago
2Thank You