Question 39
MediumOriginal questionThe MPC is 0.75 and the government raises its spending by ₹30 crore. Income rises by
Show the answer and explanation
CorrectNot quiteAnswer D
Correct answer: D
Explanation
Government spending is multiplied like investment: k = 1 ÷ 0.25 = 4.
ΔY = 4 × 30 = ₹120 crore.
- Concept
- Government spending multiplier
- Typical timeTypical
- 70 s
- Your timeYours
- —
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