Question 58
HardOriginal questionAutonomous consumption is ₹40 crore and investment is fixed at ₹60 crore. Households raise their MPS from 0.2 to 0.25. Equilibrium income
Show the answer and explanation
CorrectNot quiteAnswer D
Correct answer: D
Explanation
Before: Y = (40 + 60) ÷ 0.2 = 500. After: Y = 100 ÷ 0.25 = 400.
Saving: −40 + 0.2 × 500 = 60 before, −40 + 0.25 × 400 = 60 after: unchanged.
- Concept
- Higher MPS, same saving
- Typical timeTypical
- 100 s
- Your timeYours
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