MPS = 0.2, so investment multiplier k=MPS1=0.21=5. Change in National Income = k×ΔI=5×100=500 crores.
In an economy, every time the National Income rises 20% of the rises in income is saved by households. Now suppose there is a rise in investment by τ 100 crores, then the National Income in this economy will rise by :
Verified 13 Jul 2026.
τ 125 crores
τ 500 crores
τ 2000 crores
τ 20 crores
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