In an economy the actual level of income is Rs. 500 crores where as the full employment level of income…
Required increase in income is \(\Delta Y = 800 - 500 = \text{Rs. } 300\text{ crores}\). With \(MPC = 0.75\), the multiplier is \(k = \frac{1}{1 - 0.75} = 4\). Thus,…
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In an economy the actual level of income is Rs. 500 crores where as the full employment level of income is Rs. 800 crores. The MPC is 0.75. Calculate the increase in investment to achieve the full employment level of income
Answer and explanation
Correct answer D
Required increase in income is . With , the multiplier is . Thus, required increase in investment is .
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Rajasthan SET (RSET)