If MPC is 0.7 while government expenditure increased by N 150m; the equilibrium national income is?

A. N 214 million
B. N 45 million
C. N 105 million
D. N 500 million

Correct Answer:

Option B – N 45 million

Explanation

1/(1-MPC) x 150

1/(1-0.7) x 150 = 45m