Question 2 (Choice 2) - CBSE Class 12 Sample Paper for 2022 Boards [Term 2] - Economics - Solutions to CBSE Sample Paper - Economics Class 12

Last updated at April 16, 2024 by

Calculate Change in Income (ΔY) for a hypothetical economy. Given that:

a) Marginal Propensity to Consume (MPC) = 0.8, and

b) Change in Investment (ΔI)      = ₹1,000 crores

(2 Marks)

Answer

Given Δ I = ₹1,000 crores

MPC = 0.8

As we know,

Multiplier (K) = (1/1-MPC)

K= (1/1-0.8)

K= (1/ 0.2)

K= 5 times      

We know K = ΔF/ Δ I

5 = 𝛥 F/1000

ΔY = ₹ 5,000 crores

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CA Maninder Singh is a Chartered Accountant for the past 14 years and a teacher from the past 18 years. He teaches Science, Economics, Accounting and English at Teachoo