when MPC is equal to MPS, increase in income will be two times the increase in investment. Comment.
Asked by dwivediastha717
5th March 2018,
6:50 PM
Answered by Expert
Answer:
As we know, when investment is increased by a certain amount, then the change in income is not limited to the extent of the initial investment rather it changes in many times the change in investment.
Multiplier (k) is the ratio of increase in income due to an increase in investment. When MPC = MPS
Therefore, increase in income will be 2 times the increase in investment.
Answered by Expert
6th March 2018,
10:15 AM
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