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JAMB Economics 1990 Question 44

Question 44

National Income

If the government invests the sum of N1,000 000.00 and the marginal propensity to consume is 0.75, what is the change in income?

  1. A.N1,000 000.00
  2. B.N4,000 000.00
  3. C.N6,000 000.00
  4. D.N14,000 000.00
Show the answer and explanation

Answer: B (N4,000 000.00)

Explanation

Multiplier = 1 ÷ (1 − 0.75) = 4, so income rises by 4 × N1,000,000 = N4,000,000.