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Question
Higher the value of MPC, more Is the value of multiplier.
Higher the value of MPC, more Is the value of multiplier.
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Solution
The correct option is A True
The value of the
multiplier and MPC are directly related as the change in consumption in respect
to a given change in income becomes the change in investment. Therefore, higher MPC denotes higher multiplier.Multiplier(k) = 1/ (1-MPC)
The value of the multiplier and MPC are directly related as the change in consumption in respect to a given change in income becomes the change in investment. Therefore, higher MPC denotes higher multiplier.
Multiplier(k) = 1/ (1-MPC)
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