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Question
Which of the following statements is true?
Options
When MPS = 1, the value of the investment multiplier is also 1.
When MPS = 1, the value of the investment multiplier is 0.
When MPS = 0.5, the value of the investment multiplier is 1.
When MPS = l, the value of the investment multiplier is 0.5.
MCQ
Solution
When MPS = 1, the value of the investment multiplier is also 1.
Explanation:
K = `1/"MPS"`
K = `1/1`
K = 1
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Investment Multiplier and Its Mechanism
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