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Which of the following statements is true? When MPS = 1, the value of the investment multiplier is also 1. When MPS = 1, the value of the investment multiplier is 0. -

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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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