Given that `Deltal=900` and MPC `=0.6 ,increae in income is in the following sequence:
Increase in investment raises income of those who supply investment goods by Rs.900. This is first round.
Since MPC `=0.6,` income earners spent Rs. 540 on consumption. This raises income by 540= 900 xx0.6` in the second round.
In the Similar way, third round increase in income is `324=540xx0.6.`
In this way, income goes on increasing round by with each round increase in income equal to 60 percent of the previous round increase.
The total increase in income is:
`DeltaY=Deltal(1)/(1-MPC)=900xx(1)/(1-0.6)`
`=Rs.2,250` crores.
