How much additional income is generated in an economy with additional investment of Rs 100 crore, and when MPC=\(\frac{ 1}{2 }\)?

200 crore

The correct ansswer is option 2: 200 crore

Change in income = k (multiplier ) * Change in investment expenditure

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

k= \(\frac{1 }{\text 1 - 0.5 }\)

= 2 * Change in income

= 2 * 100 = 200