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Question
Answer the following question.
Find the value of additional investment made by the government, when MPC 05 and the increase in income (ΔY) = ₹ 1000.
Solution
MPC = 0.5
Δ Y = ₹ 1,000
I = ?
MPC = `(Δ"C")/(Δ"Y")`
`(1)/(2) =(Δ"C")/(1,000)`
500 = ΔC
K = `(1)/(1 - "MPC")`
K= `(1)/(1 - 0.5)` = 2
But K =`(Δ"Y")/(Δ"I")`
2 = `(1000)/(Δ"I")`
DI = 500
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