Question : An economy, the equilibrium level of income is Rs.12500. The ratio of marginal propensity to consume and marginal propensity to save is 4:1. Calculate the additional investment needed to reach a new equilibrium level of income of Rs.20,000 crore.
Option 1: 600
Option 2: 800
Option 3: 1200
Option 4: 1000
Correct Answer: 1200
Solution :
Question : The equilibrium level of income in an economy is Rs. 3000 crore. The autonomous consumption expenditure is equal to Rs.250 crore and investment expenditure is Rs.1000 crore. Calculate marginal propensity to save.
Question : _____________________ is defined as ratio of change in consumption to change in total income
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