If the marginal propensity to consume is 0.8 and the initial increase in tax revenues by the government is Rs. 100, then the impact on national income would be:
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2 marksMacroeconomicsKeynesian cross and the multiplierGovernment spending and tax multipliersModerateabout 1 min
UGC-NET 2025 Question 15: Keynesian cross and the multiplier
Answer and worked solution
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Keynesian cross and the multiplier has come up 167 times in 7 exams since 2006.
What this question tests
This question is on Government spending and tax multipliers, part of Keynesian cross and the multiplier in Macroeconomics.
The effect on income of changes in government spending, lump-sum taxes, transfers and income taxes.
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