Home › Bihar Board Class 12 (Arts) › Economics › Determination of Income and Employment › Autonomous expenditure rises by 10 and MPC is 0.…
Autonomous expenditure rises by 10 and MPC is 0.8. By how much does income rise?
A8
B50
C10
D80
Answer & Solution
Correct answer: B. 50
The rise is 10 times 1/(1-0.8), which is 10 times 5, giving 50.
Related questions
With a government, which term simply adds to the autonomous part of demand?How does government spending G affect aggregate demand?With A = 50, MPS = 0.2 and Y = 4000 crore, what is ex ante aggregate demand?Equilibrium output also fixes which variable, given other factors of production?The effective demand principle assumes aggregate supply is what at the fixed price?Under the effective demand principle, what determines aggregate output?Excess demand in the economy leads to what in the long run?What does deficient demand lead to in the long run?