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Income Determination & the Multiplier · Question 48 of 58

Question 48

MediumOriginal question

Investment rises by ₹100 crore and the MPC is 0.8. When the multiplier process is complete, the total rise in consumption is

Options for question 48

Show the answer and explanation
CorrectNot quiteAnswer C

Correct answer: C

Explanation

  1. ΔY = 5 × 100 = 500.

  2. ΔC = 0.8 × 500 = ₹400 crore (equivalently ΔY − ΔI = 500 − 100).

Concept
Total rise in consumption
Typical time
70 s
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