In an economy an increase in investment leads to an increase in national income three times more than increase in investment. Calculate MPC.

Explanation

Since increase in national income (Y) is three times more than increase in investment, it means total increase in (Y) is four times, i.e. multiplier (K) is 4.
`K=(1)/(1-MPC)`
`4=(1)/(1-MPC)`
`4-4MPC=1 or 4MPC=3`
`HENCE, MPC=(3)/(4)=0.75`