There is a need to increase investment by ? 1,200 crores.
Explanation:
In an economy the savings increases by ? 20 crores when income increases by ? 100 crores.
The marginal propensity to save is the ratio of change in savings due to a change in income.
Marginal propensity to save
=
=
= 0.2
The investment multiplier measures the change in the income due to a change in the investment.
Investment multiplier
=
=
= 5
Increase in investment required to increase income by ? 6,000 crores
=
= ? 1,200
