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Question
If MPC is 0.75 how much increase in investment is required to increase the income by ₹600 crore?
Numerical
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Solution
MPC = 0.75
Desired increase in income (ΔY) = ₹ 600 crore
k = `1/(1-"MPC")`
= `1/(1-0.75)`
= `1/0.25`
= 4
ΔY = k × ΔI
ΔI = `(ΔY)/k`
= `600/4`
= ₹ 150 crore
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