Economics · Macroeconomics
If the marginal propensity to consume (MPC) is 0.8 and there is an initial increase in tax revenues by the government of ₹100, then according to the tax multiplier concept, the impact on national income would be:
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1National Income will decrease by ₹100
- 2National Income will decrease by ₹400✓
- 3National Income will increase by ₹500
- 4National Income will increase by ₹100
Correct answer
National Income will decrease by ₹400
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