In an economy an increase in investment by Rs 100 crore led to ‘increase’ in national by Rs 1000 crore. Find marginal propensity to consume.
Change in investment (ΔI)=Rs 100crore
Change in income(ΔY) = Rs 1,000crore
We know that
`1/(1-MPC) " where MPC is equal to marginal propensity to consume"`
Video Tutorials For All Subjects
- Consumption Function and Propensity to Save