CBSE Class 12-commerce Answered
In an economy an increase in investment leads to 3times increase in national income.calculate MPC
Asked by sreenathsnair123 | 09 Dec, 2018, 08:41: PM
Expert Answer
The concept of investment multiplier states that an additional investment (∆I) generates additional income (∆Y) but income generated is many times more than the investment.
Multiplier (k) is the ratio of increase in national income due to an increase in investment .
Has the increase in national income(Y) is three times more than the increase in investment.
For example, an investment is Rs 2000, generates additional income but income generated is 3 times more than the investment i.e. Rs 8000. Therefore, the multiplier will be
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