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A government raises spending by Rs 20 crore and MPC is 0.75. What is the rise in income?
ARs 15 crore
BRs 26.7 crore
CRs 80 crore
DRs 60 crore
Answer & Solution
Correct answer: C. Rs 80 crore
Multiplier = 1/(1 - 0.75) = 4, so income rises by 20 times 4 = 80 crore.
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