Question

The value of the multiplier lies between 1 and ∞. Explain.

Answer 1

We know that c > 0 but less than 1

When c = 0,

K =`1/(1-c)`

= `1/(1-0)`

= 1

When c = 1,

K = `1/(1-1)`

= `1/0`

= α

∴ K > 1 when c > 0, and

K < α when c < 1