CBSE Class 12-commerce Answered
Mention the relationship which exists between the multiplier
and MPC?
Asked by Topperlearning User | 18 Apr, 2016, 02:46: PM
Expert Answer
Marginal propensity to consume and the multiplier have positive and direct relationship. When higher the marginal propensity to consume, greater the multiplier effect, whereas lower the marginal propensity to consume, lower the multiplier effect.
K = 1/1-MPC, where k is the output multiplier and MPC is the marginal propensity to consume
Answered by | 18 Apr, 2016, 04:46: PM
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