Due to increase in investment by 2000 crore. National Income increases by 8000 crores. Find the value of MPC.

0.75

The correct answer is Option (4) → 0.75

k = ΔY / ΔI

where:

    MPC = Marginal Propensity to Consume (a value between 0 and 1)
    ΔI = Change in Income
    Δ/Y = Change in National Income

k = 8000/2000 = 4

k = 1/ (1-MPC)

4= 1/ (1-MPC)

4 (1- MPC) = 1

1- MPC = 0.25

MPC = 1 - 0.25

       = 0.75