Q. 215.0( 1 Vote )

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Answer :

MPC = 0.6


Initial investment = 100 crores


Multiplier (K) = 1/1MPC


= 1/1-0.6


= 1/0.4 = 2.5



At equilibrium C+I = C+S


Thus I=S


I=S in the economy when the income level is 200 crores. At 200 crores, the level of savings equal the level of investment; both being equal to 80 crores.


Thus, the equilibrium level of income in the economy is 200 crores


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