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As a result of increase in investment by...

As a result of increase in investment by 20 crore, national income increases by 100 crore. Find the MPC.

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`K=(DeltaY)/(DeltaI)=(100)/(20)=5`
`K=(1)/(1-MPC)`
`5=(1)/(1-MPC) or 5(1-MPC)=1 or 5-5MPC=1`
`5MPC=5-1`
`"Hence" MPC=(4)/(5)=0.8`
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RADHA BHUGANA-INCOME DETERMINATION AND MULTIPLIER-Practical Application
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