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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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