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JAMB Economics 2012 Question 28

Question 28

National Income

The investment expenditure of an economy changes by ₦2 million and MPC is 0.75. What is the change in income?

  1. A.₦0.5m
  2. B.₦1.5m
  3. C.₦2.6m
  4. D.₦8.0m.
Show the answer and explanation

Answer: D (₦8.0m.)

Explanation

Multiplier = 1/(1 − 0.75) = 4. Change in income = 4 × ₦2m = ₦8m.