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Income Determination & the Multiplier · Question 34 of 58

Question 34

MediumOriginal question

Investment rises by ₹100 crore and income rises by ₹400 crore. The MPC is

Options for question 34

Show the answer and explanation
CorrectNot quiteAnswer B

Correct answer: B

Explanation

  1. k = 400 ÷ 100 = 4, so MPS = 1 ÷ 4 = 0.25.

  2. MPC = 1 − 0.25 = 0.75.

Worth noting

0.25 is the MPS.

Concept
MPC from the multiplier
Typical time
70 s
Your time
—
The rule this testsThe investment multiplier
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Ten questions from Income Determination & the Multiplier, at your own pace.

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Ten questions from Income Determination & the Multiplier, at your own pace.

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