When \(\text{MPC} = \text{MPS}\), what is the value of investment multiplier?
2
The investment multiplier \(k\) is given by \(k = \dfrac{1}{1 - \text{MPC}} = \dfrac{1}{\text{MPS}}\).
When \(\text{MPC} = \text{MPS}\), both must equal \(0.5\) because MPC \(+\) MPS \(= 1\).
Therefore \(k = \dfrac{1}{1 - 0.5} = \dfrac{1}{0.5} = 2\).
Hence, 2 is correct.
Similar Questions
Who among the following formulates the monetary policy of the Government of India?
Open Market Operations by the RBI refers to the sale and purchase of ______.
Important Questions from Economy
When goods are produced by exploiting natural resources, it is an activity associated with:
A system in which local farmers were allowed to cultivate temporarily within a plantation is known as:
Which goods from India dominated the international textile markets before the age of mechanized industries?
Which type of farming is practiced in areas of high population pressure on land?
The major economic attribute for comparing countries is their:
