Economics · Macroeconomics
In a developing economy, the marginal propensity to consume (MPC) is 0.8. If the government increases autonomous investment expenditure by ₹1,000 crore, consider the following statements: 1. The value of the simple investment multiplier is 5. 2. Total national income will increase by ₹5,000 crore through the multiplier process. 3. If MPC decreases, the multiplier effect will strengthen. 4. This policy represents an expansionary fiscal stance. Which of the statements given above are correct?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 11, 2 and 3
- 22 and 3 only
- 31 and 3 only
- 41, 2 and 4✓
Correct answer
1, 2 and 4
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