Home
Class 12
ECONOMICS
If the ration of marginal propensity to ...

If the ration of marginal propensity to consume and marginal propensity to save is 4:1, the value of investment multiplier will be 4

Text Solution

Verified by Experts

Ration of 4:1 between marginal propensity to consume(MPC) and marginal propensity to save (MPC) signifies `MPC=(4)/(5)` or 0.8 and `MPS=(1)/(4)` or 0.2
Investment Multiplier(k)=`(1)/(MPS) =(1)/(0.2)` =5
Promotional Banner

Topper's Solved these Questions

  • INCOME DETERMINATION AND MULTIPLIER

    SANDEEP GARG|Exercise SHORT TYPE|11 Videos
  • INCOME DETERMINATION AND MULTIPLIER

    SANDEEP GARG|Exercise LONG|12 Videos
  • INCOME DETERMINATION AND MULTIPLIER

    SANDEEP GARG|Exercise HOTS HIGHER ORDER THINKING SKILLS QUESTION|14 Videos
  • GOVERNMENT BUDGET AND THE ECONOMY

    SANDEEP GARG|Exercise Unsolved Practicals|8 Videos
  • MEASUREMENT OF NATIONAL INCOME

    SANDEEP GARG|Exercise Miscellaneous Practicals|16 Videos

Similar Questions

Explore conceptually related problems

If the marginal propensity of consume is greater than marginal propensity to save, the value of the multiplier will be (choose the correct alternative).