Final answer:
The increase in National income from the new investment of 1000 crores, with an MPS of 0.4, would be 600 crores.
Step-by-step explanation:
In order to calculate the increase in National income, we will need to use the concept of the marginal propensity to save (MPS). The MPS is the proportion of additional income saved rather than consumed. In this case, the MPS is given as 0.4, which means that 40% of any additional income will be saved.
To calculate the increase in National income, we need to first determine the amount of additional income generated by the new investment. If we assume that all of the new investment is spent, then the increase in National income would be 1000 crores.
However, we need to consider the MPS. Since 40% of the additional income will be saved, the increase in National income will be 60% of 1000 crores, which is 600 crores. Therefore, the increase in National income from the new investment of 1000 crores, with an MPS of 0.4, would be 600 crores.