Question : The investment multiplier is 3. If there is an autonomous increase in investment spending of INR 800, what will be the change in equilibrium income?
Option 1: INR 2,300
Option 2: INR 2,400
Option 3: INR 2,800
Option 4: INR 3,200
Answer (1)
22nd Jan, 2024
Correct Answer:
INR 2,400
Solution : The correct answer is (B) INR 2,400
Given that the investment multiplier is 3 and there is an autonomous increase in investment spending of INR 800, the change in equilibrium income can be calculated as follows:
Change in Equilibrium Income = Autonomous Change in Investment * Investment Multiplier
= INR 800 * 3
= INR 2,400
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