What will be the change in income when change in investment  is Rs 2,000 and MPC is 0.85?

13,333

Investment multiplier refers to the increase in the aggregate income of the economy as a result of an increase in the investments done by the government.  The ratio of ΔY to ΔI is called the investment multiplier.

K = \(\frac{ΔY}{ΔI}\) 

K = \(\frac{1}{\text{1-MPC}}\)

So, 

\(\frac{1}{\text{1-MPC}}\) =  \(\frac{ΔY}{ΔI}\)

\(\frac{1}{\text{1-0.85}}\) = \(\frac{ΔY}{2,000}\)

\(\frac{1}{\text{0.15}}\) = \(\frac{ΔY}{2,000}\)

ΔY = \(\frac{100}{\text{15}}\) * 2000

ΔY = 13,333