Government decides to increase the expenditure on giving subsidies to the farmers by Rs. 10 crore. As per a team of experts instead of giving subsidies, government should increase spending of Rs.10...

Government decides to increase the expenditure on giving subsidies to the farmers by

Rs. 10 crore. As per a team of experts instead of giving subsidies, government should

increase spending of Rs.10 crore on building the cold storages and roads. Use the

concept of multiplier to explain you are in favour of which type of spending: on

subsides or cold storages and roads? Let’s assume MPC is 0.8 and t=.25 and Y0= Rs.

600 crore. Use diagrams to explain your answer.