Question : The investment multiplier is 4. If there is an autonomous increase in investment spending of INR INR 1,000,
what will be the change in equilibrium income?
Option 1: INR 1,000
Option 2: INR 4,000
Option 3: INR 5,000
Option 4: INR 9,000
Answer (1)
21st Jan, 2024
Correct Answer: INR 5,000
Solution : The correct answer is (B) INR 4,000
Given: Investment multiplier (K) = 4
Autonomous increase in investment spending = INR 1,000
Change in equilibrium income = K * Autonomous increase in investment spending
Change in equilibrium income = 4 * 1000
Change in equilibrium income = 4000
Therefore, the change in equilibrium income is INR 4,000.
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