In an economy MPS=0.20 and investment is increased by Rs. 400 crores, than total increase in income is _ Crores. Option 1: Rs. 2000 Option 2: Rs. 2500 Option 3: Rs. 2700 Option 4: Rs. 3,200

Answer: Rs. 2000. Solution: Multiplier k = 1/MPS k = 1/0.20 = 5 Change in Income = k x Investment = 5 x 400 = Rs.\ 2000 Crores Therefore, the total increase in income is Rs.\ 2000 Crores.

Macro

Income & Employment

Medium

In an economy MPS=0.20 and investment is increased by Rs. 400 crores, than total increase in income is _____ Crores.

Rs. 2000

Rs. 2500

Rs. 2700

Rs. 3,200

✅ Correct Option: 1

Multiplier $k = \dfrac{1}{MPS}$

$k = \dfrac{1}{0.20} = 5$

Change in Income $= k \times \Delta \text{Investment}$

$= 5 \times 400$

$= Rs.\ 2000$ Crores

Therefore, the total increase in income is $Rs.\ 2000$ Crores.

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List-I	List-II
(A) Average Propensity to Consume	(I) It is the savings per unit of income
(B) Marginal Propensity to Consume	(II) It is the consumption per unit of income
(C) Average Ppropensity to Save	(III) It is the change in savings per unit change in income
(D) Marginal Propensity to Save	(IV) It is the change in consumption per unit change in income.

Choose the correct answer from the options given below:

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(A) Ex-ante depicts what has been planned?

(B) Ex-post depicts what has been estimated production?

(D) Ex-post depicts what has actually happened.?

Choose the correct answer from the options given below:

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In an economy MPS=0.20 and investment is increased by Rs. 400 crores, than total increase in income is _____ Crores.

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