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In an economy, 75 percent of the increase in income is spent on consumption. Investment is increased by Rs 1,000 crore. Calculate the Total increase in income? -

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Question

In an economy, 75 percent of the increase in income is spent on consumption. Investment is increased by Rs 1,000 crore. Calculate the Total increase in income?

Options

  • 4000 crores

  • 8000 crores

  • 3000 crores

  • 9000 crores

MCQ

Solution

4000 crores

Explanation:

MPC = `-3/4`, MPS = `-1/4` K = 4

ΔY = ΔI × K

= 1000 × 4

= Rs. 4000 Crores 

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