Question

The marginal propensity to invest (MPI) is defined as ______.

Options

• The ratio of total investment to total income

• The ratio of change in investment to change in income

• The ratio of total savings to total income

• The ratio of change in income to change in investment

Answer 1

The marginal propensity to invest (MPI) is defined as the ratio of change in investment to change in income.

Explanation:

MPI measures how much investment changes when income changes, so it is calculated as ΔI/ΔY.