Question

As a result of increase in investment by र125 crores, national ineeme increases by र 500 crores. Calculate 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 500 over 125 space equals space 4 straight K space equals space fraction numerator 1 over denominator 1 minus MPC end fraction space space space or space space space space 4 space equals space fraction numerator 1 over denominator 1 minus MPC end fraction space space or space space 4 minus 4 space MPC space equals space 1

4 space MPC space equals space 3 space left parenthesis equals space 4 space minus space 1 right parenthesis space or space space MPC space equals space 3 over 4 space equals space 0.75

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