Find out the value of the multiplier, if MPC is zero.

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Infinity

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Cannot be determined

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Solution

The correct option is B
1

Multiplier = $\frac{1}{1 - M P C}$

= 1.

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Similar questions

State whether the following are true or false. Give reasons:

(a) At zero level of income, savings are positive.

(b) The relationship between multiplier and MPC is inverse and that with MPS is direct.

(d) The value of MPS can be negative.

= 0

Value of investment multiplier varies between zero and infinity.

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