When marginal propensity to consume is zero, the value of investment multiplier will also be zero.

True

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False

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Solution

The correct option is B False
False.
When MPC = 0, then
Multiplier(k) = 1/( 1 - MPC) = 1/ (1-0) = 1/1 = 1 time.

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Giving reasons state whether the following statements are true or false:

(a) When marginal propensity to consume is zero, the value of investment multiplier will be 1.

(b) If the ratio of marginal propensity to consume and marginal propensity to save is 4: 1, the value of investment multiplier will be 4.

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