What will be the value of investment multiplier and change in final income when change in investments is Rs 500 crore and MPS is 0.3?

Investment multiplier = 0.33 and change in final income = Rs 1,667 crore

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 = \(\frac{1}{\text{1 - MPC}}\)

K = \(\frac{1}{\text{MPS}}\)

K = \(\frac{1}{\text{0.3}}\)

K = \(\frac{10}{\text{3}}\)

K = 0.33

Also, 

K = \(\frac{ΔY}{ΔI}\)

\(\frac{10}{3}\) = \(\frac{ΔY}{500}\)

ΔY = \(\frac{10}{3}\) * 500

ΔY = \(\frac{5000}{3}\)

ΔY = 1667