CBSE 2022 Class 12 Economics Delhi Set 1 (Term 2)

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Question : 15 of 21
 
Marks: +1, -0
Tnvestment multiplier and Marginal Propensity to Consume are directly related to each other'. Explain with the help of numerical example.
Solution:
Investment multiplier and MPC are directly related to each other. It can be as follows:
K=11−MPC
If MPC=0.4
thenK=11−0.4=10.6
If MPC=0.6
thenK=11−0.6=10.4
∴ Both are directly related with the increase in MPC, investment multiplier will increases.
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