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प्रश्न
How is the investment multiplier related to marginal propensity to consume?
How is the multiplier related to marginal propensity to consume?
Briefly explain how investment multiplier is related to Marginal Propensity to Consume (MPC).
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उत्तर
The investment multiplier is given by the formula
K = `1/(1 - MPC)`
= `1/(1 - c)`
where C is the marginal propensity to consume (MPC).
This means the multiplier’s value depends directly on the MPC. The greater the MPC, the higher the multiplier, and the lower the MPC, the smaller the multiplier.
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संबंधित प्रश्न
Define multiplier
What is the relation between marginal propensity to consume and multiplier?
Calculate the marginal propensity to consume if the value of multiplier.
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a. `1/"MPC"`
b. `1/"MPS"`
c. `1/(1-"MPS")`
d. `1/(MPC- 1)`
If MPC = 1, the value of the multiplier is ______
Calculate the marginal propensity to consume if the value of multiplier is 4.
Explain the relationship between the investment multiplier and marginal propensity to consume.
If in an economy :
Change in initial Investments (∆I) = ₹ 500 crores
Marginal Propensity to Save (MPS) = 0.2
Suppose in an economy, the initial deposits of ₹ 400 crores lead to the creation of total deposits worth ₹ 4000 crores.
Under the given situation the value of reserve requirements would be ____________.
Keynes derived Investment Multiplier from Kahn’s ______
Discuss the mechanism of investment multiplier with the help of a numerical.
Which of the following statements is true?
For a hypothetical economy, assuming there is an increase in the marginal Propensity to Consume (MPC) from 75% to 90% and change in investment to be ₹ 1,000 crore.
Using the concept of investment multiplier, calculate the increase in income due to change in Marginal Propensity to Consume (MPC).
If a linear consumption curve takes a parallel shift downwards, the value of investment multiplier will ______.
Explain the concept of Investment Multiplier using a diagram.
Illustrate that the investment multiplier is inversely proportional to MPS.
