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What is the minimum value of multiplier and why

Posted by Dk Khanna 5 years, 2 months ago

CBSE > Class 12 > Economics

2 answers

Dk Khanna 5 years, 1 month ago

Tysm?

0Thank You

Gaurav Seth 5 years, 2 months ago

Minimum and maximum value of multiplier. Value of K depends upon value of MPC or MPS. We know size of MPC cannot be negative, it can be, at the most, zero (minimum value) and maximum value can be 1. Let us take two extreme values (1 and 0) of MPC to find out value of K.
(i) Minimum value of multiplier is l. How?
When MPC = 0, then MPS = 1 – 0 = 1. Hence,
(ii) Maximum value of K may be ∞ (infinity). How?
When MPC = 1, then MPS = 1 – 1 = 0. Hence
Between these two extremes (1 and infinity), value of multiplier varies depending upon value of MPC.

4Thank You

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CBSE > Class 12 > Economics