Calculate change in income when MPC = 0.8 and change in investment = र 1,000.

Solution

straight K left parenthesis Multiplier right parenthesis space equals space fraction numerator 1 over denominator 1 minus MPC end fraction space equals space fraction numerator 1 over denominator 1 minus 0.8 end fraction space equals space fraction numerator 1 over denominator 0.2 end fraction space equals space fraction numerator 1 over denominator begin display style 1 fifth end style end fraction space equals space 5

Change in income = Change in investment x K = 1000 x 5 = 5000

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