Question

Complete the following table :

Situation	Change in Investment (ΔI)	Change in Income (ΔY)	Marginal Propensity to Consume (MPC)	Investments Multiplier (K)
(a)	100	(i) __________	0.75	(ii) __________
(b)	(iii) __________	1000	(iv) __________	5
(c)	500	(v) __________	0.5	(vi) __________

Hint:

Use K = 1 / (1 - MPC) and K = change in Y / change in I. This gives 400, 4, 200, 0.8, 1000 and 2.

Answer 1

Step 1: Recall the formulas:
The investment multiplier is K = 1 / (1 - MPC) = 1 / MPS.
It also equals the change in income divided by the change in investment: K = change in Y / change in I.
We use these two formulas to fill each blank.

Step 2: Situation (a): I = 100 and MPC = 0.75:
(ii) K = 1 / (1 - 0.75) = 1 / 0.25 = 4.
(i) Change in Y = K x change in I = 4 x 100 = 400.

Step 3: Situation (b): Y = 1000 and K = 5:
(iii) Change in I = change in Y / K = 1000 / 5 = 200.
(iv) K = 1 / (1 - MPC), so 5 = 1 / (1 - MPC). This gives 1 - MPC = 1/5 = 0.2, so MPC = 0.8.

Step 4: Situation (c): I = 500 and MPC = 0.5:
(vi) K = 1 / (1 - 0.5) = 1 / 0.5 = 2.
(v) Change in Y = 2 x 500 = 1000.

Step 5: Write the completed table:

Situation	Change in Investment	Change in Income	MPC	Multiplier (K)
(a)	100	(i) 400	0.75	(ii) 4
(b)	(iii) 200	1000	(iv) 0.8	5
(c)	500	(v) 1000	0.5	(vi) 2

Final Answer:
The six blanks are (i) 400, (ii) 4, (iii) 200, (iv) 0.8, (v) 1000 and (vi) 2. \[ \boxed{\text{(i) 400, (ii) 4, (iii) 200, (iv) 0.8, (v) 1000, (vi) 2}} \]