As a result increase in investment by र 20 crores, national income increases by 100 crores. Find out MPC.

Solution

straight K space equals space fraction numerator increment straight Y over denominator increment straight I end fraction space equals space 100 over 20 space equals space 5 straight K space equals space fraction numerator 1 over denominator 1 minus MPC end fraction space space or space space 5 space equals space fraction numerator 1 over denominator 1 minus MPC end fraction space or space 5 space MPC space equals space 5 space minus space 1 space equals space 4 or space MPC space equals space 4 over 5 space equals space 0.8

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