In an economy with every increased income, 10% of rise in income is saved, suppose a fresh investment of 120 - Economics - Determination of Income and Employment

Question

In an economy with every increased income, 10% of rise in income is
saved, suppose a fresh investment of 120 takes place in the economy
Calculate change in income and change in consumption

Shrivathsan V · Accepted Answer

Marginal Propensity to Save*(MPS) = 10% = 0 1
Marginal Propensity to Consume(MPC) = 1 - MPS= 0 9

We know that Change in Income = Change in Investment//(1-MPC)
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In an economy with every increased income, 10% of rise in income is saved, suppose a fresh investment of 120 takes place in the economy. Calculate change in income and change in consumption