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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