What will be the value of MPS when increase of Rs 20,000 in investment in an economy results in increase in income of Rs 48,000?

0.41

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 = \(\frac{1}{\text{1-MPC}}\)  = \(\frac{1}{\text{MPS}}\)

So, 

\(\frac{1}{\text{MPS}}\) =  \(\frac{ΔY}{ΔI}\)

\(\frac{1}{\text{MPS}}\) =  \(\frac{48,000}{20,000}\)

MPS = \(\frac{20,000}{48,000}\)

MPS = 0.41