in an economy 75% of increase in income is spent on consumption Investment is increased by 1000 Calculate Total increase - Economics - Determination of Income and Employment

Question

in an economy 75% of increase in income is spent on consumption
Investment is increased by 1000 Calculate Total increase in income
and Total increase in consumption expenditure?

Rajat Agrawal · Accepted Answer

Investment Multiplier =1/1-MPC
=1/1-0 75
=1/0 25
ANS 4

TOTAL INCREASE IN INCOME =1000X4
=4000

INCREASE IN CONSUMPTION = 75? OF 4000
= 3000

in an economy 75% of increase in income is spent on consumption.Investment is increased by 1000.Calculate Total increase in income and Total increase in consumption expenditure?