JAMB - Economics (2012 - No. 23)

The investment expenditure of an economy changes by N2 million and MPC is 0.75
What is the change in income?
N0.5m
N1.5m
N2.6m
N8.0m

Explanation

MPC is a proportion of an aggregate raise in pay that a consumer spends on the consumption of goods and services, as opposed to saving it.

Investment expenditure = 2,000,000
MPC = 0.75
0.75 x 2,000,000 = 1,500,000

change in income = 2,000,000 - 1,500,000 = 500,000

 

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