Question

What will be the value of multiplier if all of the additional income is converted into additional consumption?

Answer 1

In such a situation, $\Delta \text{C}=\Delta \text{Y}$ (or change in consumption = change in income) or that

$\text{MPC}=\frac{\Delta \text{C}}{\Delta \text{Y}}=1$

Accordingly, K (multiplier) would be:

$\text{K}=\frac{1}{1-\text{MPC}}=\frac{1}{1-1}=\frac{1}{0}=\infty$

The multiplier value would tend to infinity.