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<img class=Wirisformula style=vertical-align: -9px; src=/application/zrc/images/qvar/ECEN12051355.png alt=straight K space equals space 1 over MPS space equals space fraction numerator 1 over denominator 0.2 end fraction space equals space fraction numerator 1 over denominator 1 divided by 5 end fraction space equals space 5 width=188 height=25 align=middle data-mathml=«math xmlns=¨http://www.w3.org/1998/Math/MathML¨»«mi mathvariant=¨normal¨»K«/mi»«mo»§#160;«/mo»«mo»=«/mo»«mo»§#160;«/mo»«mfrac»«mn»1«/mn»«mi»MPS«/mi»«/mfrac»«mo»§#160;«/mo»«mo»=«/mo»«mo»§#160;«/mo»«mfrac»«mn»1«/mn»«mrow»«mn»0«/mn»«mo».«/mo»«mn»2«/mn»«/mrow»«/mfrac»«mo»§#160;«/mo»«mo»=«/mo»«mo»§#160;«/mo»«mfrac»«mn»1«/mn»«mrow»«mn»1«/mn»«mo»/«/mo»«mn»5«/mn»«/mrow»«/mfrac»«mo»§#160;«/mo»«mo»=«/mo»«mo»§#160;«/mo»«mn»5«/mn»«/math»> Increase in Income = K x Increase in investment = 5 x 1000 = 5000 crores.

In an economy MPS is 0.2. Investment increases by 1000 crores. Calculate total increase in national income.

straight K space equals space 1 over MPS space equals space fraction numerator 1 over denominator 0.2 end fraction space equals space fraction numerator 1 over denominator 1 divided by 5 end fraction space equals space 5

Increase in Income = K x Increase in investment = 5 x 1000 = 5000 crores.

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