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Explain the relationship between marginal propensity …

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Explain the relationship between marginal propensity to consume and investment multiplier

Posted by Waqas Khan 5 years, 11 months ago

CBSE > Class 12 > Economics

2 answers

Waqas Khan 5 years, 11 months ago

Thank you

Tamisha Upadhyay 5 years, 11 months ago

There is a direct relationship between investment multiplier and MPC ...this is because:- -the investment done by for example A is another person's say B's income ...... So when investment increases -income increases.......so consumption also increases -as amount of change in investment results in change in income...which in turn results into change in consumption.......so higher the change in investment-higher will be change in income.i.e.higher will be change in consumption and vice-versa

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