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.
Correct Answer :
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):
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:
Rearranging the equation to solve for ΔI:
Therefore, the value of the change in investment in the economy is 160 crore.
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