Question

If an increase of र 10,000 in investment in an economy results in an increase in income of र 40,000, calculate MPS in the economy.

Solution

straight K space equals space fraction numerator increment straight Y over denominator increment straight I end fraction space equals space fraction numerator 40 comma 000 over denominator 10 comma 000 end fraction space equals space 4 straight K space equals space 1 over MPS space or space MPS space equals space 1 over straight K

MPS space equals space 1 fourth space equals space 0.25 space left parenthesis Value space of space straight K space is space reverse space of space MPS right parenthesis

Some More Questions From Determination of Income and Employment Chapter

For Daily Free Study Material Join wiredfaculty