Current Affairs · Macroeconomics
Which of the following statements is correct regarding the investment multiplier?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1MPC multiplied by MPS equals 1.
- 2Investment multiplier is zero when Marginal Propensity to Save (MPS) is zero.
- 3Slope of the consumption function is indicated by Average Propensity to Consume (APC), and not MPC.
- 4Investment multiplier is positively related to Marginal Propensity to Consume (MPC).✓
Correct answer
Investment multiplier is positively related to Marginal Propensity to Consume (MPC).
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