ECONOMICS
AGGREGATE DEMAND
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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if MPS = 0.6, what will be
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30
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50
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Either A or B
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None of the above
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Explanation:
Detailed explanation-1: -Change in consumption= 3000-900= Rs. 2, 100 crores. Was this answer helpful?
Detailed explanation-2: -k = 1/ ( 1-0.50 ) = 1/ 0.50 = 2 times.
Detailed explanation-3: -If out of it, he spends 70 paise on consumption (i.e., MPC = 0.7) and saves 30 paise (i.e., MPS = 0 3) then MPC + MPS = 0.7 + 0.3 = 1.
Detailed explanation-4: -Then, if MPC is 0.3, then MPS is 0.7. So the multiplier (1/MPS) would be 1.43 (2dp).
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