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Income Determination & the Multiplier · Question 39 of 58

Question 39

MediumOriginal question

A rise of ₹20 crore in autonomous consumption, with an MPC of 0.8, raises equilibrium income by

₹16 croreCorrect answerYour answer₹20 croreCorrect answerYour answer₹25 croreCorrect answerYour answer₹100 croreCorrect answerYour answer

Show the answer and explanation

CorrectNot quiteAnswer D

Correct answer: D

Any rise in autonomous spending is multiplied: k = 1 ÷ 0.2 = 5.
ΔY = 5 × 20 = ₹100 crore.

Concept: Multiplier on autonomous consumption
Typical timeTypical: 70 s
Your timeYours: —

The rule this testsThe investment multiplier

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