if income increases from 2500 to 3910 members investment increases by 350 the MPC should be
Dear Student,
Multiplier (k) =>
Change in Income = 1
Change in investment MPS
=> (3910 - 2500) = 1
350 MPS
=> 1410 = 1
350 MPS
=> 4.0286 = 1
MPS
=> MPS = 1
4.0286
=> MPS = 0.25 (Approx)
=> MPC = 1 - MPS
=> MPC = 1 - 0.25
=> MPC = 0.75
Regards.
Multiplier (k) =>
Change in Income = 1
Change in investment MPS
=> (3910 - 2500) = 1
350 MPS
=> 1410 = 1
350 MPS
=> 4.0286 = 1
MPS
=> MPS = 1
4.0286
=> MPS = 0.25 (Approx)
=> MPC = 1 - MPS
=> MPC = 1 - 0.25
=> MPC = 0.75
Regards.