There is an increase in investment of Rs. 100 crore in an economy. Marginal Propensity to Consume is 1. What can you say about total increase in the income? Calculate.

Here , ∆I = Rs.100 crore, MPC = 1

Now, K = 1 / 1 - MPC

or K = 1 /1-1 = $\infty $

Again, we know that, K = ∆Y / ∆I

or $\infty $ = ∆Y/100

or ∆Y = 100 X $\infty $

∆Y = $\infty $

There will be infinite increase in the income, if MPC = 1.