CBSE Class 12-commerce Answered
Mention the relationship which exists between
multiplier and MPS?
Asked by Topperlearning User | 18 Apr, 2016, 02:46: PM
Expert Answer
Multiplier and the marginal propensity to save have inverse relationship. When higher the marginal propensity to consume, lower the multiplier effect and lower the marginal propensity to consume, higher the multiplier effect.
K = 1/MPS, where k is the output multiplier and MPS is the marginal propensity to consume
Answered by | 18 Apr, 2016, 04:46: PM
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ANSWERED BY EXPERT
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ANSWERED BY EXPERT