The investment multiplier expresses the magnitude of change in investment as a result of change in income.

True

No worries! We‘ve got your back. Try BYJU‘S free classes today!

False

Right on! Give the BNAT exam to get a 100% scholarship for BYJUS courses

Open in App

Solution

The correct option is B False
False.
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. Therefore, it expresses the magnitude of change in income as a result of change in investment in the economy.

Suggest Corrections

Similar questions

Q. The total increase in income due to a change in investment is an infinite amount as per the process of investment multiplier.

Describe the graphical representation of investment multiplier.

If a change in investment of Rs. 100 crores is required to bring a change in income by Rs. 1000 crores, calculate MPC and MPS.

In an economy income increases by 10,000 as a result of a rise in investment expenditure by 1,000. Calculate

(i) Investment multiplier.

(ii) Marginal propensity to consume.

Q. Induced investment is that investment which is undertaken as a result of change in the _____________.

The consumption function in an economy is C = 80 + 0.6Y and investment level in an economy is 800 crores. State whether the following are true or false:
(a) Equilibrium level of income is 2100 crores.
(b) 275 crores is the total change in income if investment rises by 150 crores.
(c) Value of multiplier is 2.5.

Join BYJU'S Learning Program