The investment expenditure of an economy changes by N2 million and MPC is 0.75 What
ECONOMICS
JAMB 2012
The investment expenditure of an economy changes by N2 million and MPC is 0.75 What is the change in income?
- A. N0.5m
- B. N1.5m
- C. N2.6m
- D. N8.0m
Correct Answer: A. N0.5m
Explanation
MPC is a proportion of an aggregate raise in pay that a consumer spends on the consumption of goods and services, as opposed to saving it. Investment expenditure = 2,000,000 MPC = 0.75 0.75 x 2,000,000 = 1,500,000 change in income = 2,000,000 - 1,500,000 = 500,000
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