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Question
If Marginal Propensity to Save (MPS) is 0.25 and the initial change in investment is ₹ 250 crores, then the final change in income would be ______.
Options
₹ 1000 crores
₹ 1200 crores
₹ 500 crores
₹ 3500 crores
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Solution
₹ 1000 crores
Explanation:
ΔY = `Δ"I" xx 1/("MPS")`
ΔY = `₹ 250 xx 1/0.25`
= ₹ 1,000 crores
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