Question Details

If the value of Investment Multiplier is 5 and the increased income is 800 crore in an economy, then find the value of change in the investment in the economy.

Options

A

4000 crore

B

120 crore

C

400 crore

D

160 crore

Show Answer

Correct Answer :

Option C

400 crore

Solution :

The correct option is 160 crore.

To find the value of change in the investment in the economy, we can use the formula for the investment multiplier (k):
k = Δ Y Δ I
where:
- k is the investment multiplier,
- ΔY is the change in income (increased income),
- ΔI is the change in investment.

From the given data:
- Investment Multiplier (k) = 5
- Increased Income (ΔY) = 800 crore

Substituting these values into the multiplier formula:
5 = 800 Δ I

Rearranging the equation to solve for ΔI:
Δ I = 800 5
Δ I = 160
Therefore, the value of the change in investment in the economy is 160 crore.

Unlock Our Free Library

Access expert-curated educational resources and study materials—completely free.

Discover more resources

You may also like

Mock Tests

View All
  • BANKING
  • intermediate
  • 3 hours and 30 mins
  • data interpretation (di), economics, english, general aptitude (ga), general awareness, logical reasoning

Ask AI Tutor
5 left
Q1 View Question & Options
AI Tutor is solving this question...
Reading question context & options...