Question

Explain the meaning of investment multiplier. What can be its minimum value and why?

Answer 1

Investment multiplier refers to the number of time by which the increase in output or income exceeds the increase in investment. It is measured as the ratio between change in income and change in investment and it is denoted as 'k'.

The minimum value of K is one because there can be only one time change in the income if the is some change in the investment.