Define multiplier. What is the relation …

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Define multiplier. What is the relation between marginal propensity to consume and multiplier ? Calculate the mpc if the value of multiplier is 4

Posted by Arpit Jaiswal 6 years, 7 months ago

CBSE > Class 12 > Economics

4 answers

Shruti Rekhi 6 years, 7 months ago

Multiplier = ∆Y/∆I When consumption increases -> dd increases-> production increases ->employment increases-> national income increases-> consumption increases and cons of one is the income of another

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Shruti Rekhi 6 years, 7 months ago

There is a direct relation between mpc and multiplier.

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Dev Narula 6 years, 7 months ago

In this case k is 4 So 4=1/1-mpc 4-4mpc=1 4mpc=3 Mpc=3/4 Mpc=0.75

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Dev Narula 6 years, 7 months ago

Multiplier is denoted by K K=1/1-mpc

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