Ayushi Asked a Question
August 11, 2020 12:40 pmpts 30 pts
60. Given C 60+ 0.8Yd, Yä = Y, l= 7O, if investment ([) increases by 10 what would be new income and value of multiplier: (1) Income= 700, multiplier = 5 (2 Income = 650, multiplier = 5 (3 Income 600 multiplier =6 (4) None of the Above TTC- 60 + 0.8Yd, Yd - Y, I - 70 z PraST () 10 1) 37T73 700, 5 = 5 (2) T4 650, T5 = 5 (3) HT = 600, T"T6- 6 (4} 62. The MEC and rate of interest determine investment in any economy Which of the following statement is true about them ? (1) As level of investment incTeases MEC increase and rate of interest falls (2) MEC is high during recession (3) MEC is positively related to expected income and negatively to supply price of capital assets 4) All of the Above
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  • Nidhi taparia Best Answer
    60. Option (1) is the correct answer. Please refer to the image.
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  • Nidhi taparia thankyou
    61. Option (3) is the correct answer. Let's look at each option to understand why it's right or wrong. Option (1) suggests investment decides MEC and Interest rate. While the relat...
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  • Nidhi taparia
    Option (2) is incorrect because MEC isn't high during recession. In fact, Keynes maintains that recession kicks in because MEC falls.
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  • Nidhi taparia
    Option (3) is correct because MEC does depend on prospective income positively and supply price negatively.
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  • Nidhi taparia
    Option (4) is automatically incorrect.
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