Question

A र 200 crores increase in investment leads to a rise in national income by र 1000 crores. Find out MPC.

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Solution

straight K space equals space fraction numerator increment straight Y over denominator increment straight I end fraction space equals space 1000 over 200 space equals space 5 straight K space equals space fraction numerator 1 over denominator 1 minus MPC end fraction space space space space space or space space space space 5 space equals space fraction numerator 1 over denominator 1 minus MPC end fraction space space space or space space 5 space minus space 5 space MPC space space equals space 1

5 MPC space equals space 4 space left parenthesis equals space 5 space minus space 1 right parenthesis space space space or space space space MPC space equals space 4 divided by 5 space equals space 0.8

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