JAMB Economics 2014 Objective — Question 26

Question 26 of 50 from the Joint Admissions and Matriculation Board (JAMB) Economics 2014 Objective paper, with the correct answer and a full explanation.

If MPC=2/3 and investment is 100 million, the level of national income is

A. #300 millionCorrect
B. #100 million
C. #10 million
D. #303 million

Explanation

National Income = Multiplier × Investment, multiplier=1/MPS, MPS+MPC=1, MPS=1−2/3=1/3, multiplier=1/(1/3)=3. National Income = 3×#100m = #300m.

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