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प्रश्न
'Investment multiplier and Marginal Propensity to Consume are directly related to each other'. Explain with the help of numerical example.
उत्तर
Investment multiplier and MPC are directly related to each other. It can be as follows:
K = `1/(1 - "MPC")`
If, MPC = 0.4
then, K = `1/(1 - 0.4)`
= `1/0.6`
If, MPC = 0.6
then, K = `1/(1 - 0.6)`
K = `1/0.4`
Hence, Both are directly related with the increase in MPC, investment multiplier will increases.
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