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CBSE Class 12-commerce Answered

Value of investment multiplier does not vary between zero and infinity. Justify.
Asked by Topperlearning User | 18 Apr, 2016, 02:46: PM
answered-by-expert Expert Answer

Let us consider the following equation:

K= 1/1-MPC, where K is multiplier and MPC is marginal propensity to consume.

Here, even if MPC is zero, the investment multiplier will be 1. When MPC =1, the value of investment multiplier is infinity.

Answered by | 18 Apr, 2016, 04:46: PM
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