Keynesian multiplier establishes relationship between which of the following options?

Income and investment

The correct answer is Option 1: Income and investment

The Keynesian multiplier shows how a change in investment can lead to a larger change in income. This is because when investment increases, it leads to increased income for those involved in the investment process. This increased income is then spent, leading to further income generation, and so on. This process amplifies the initial increase in investment, resulting in a multiplied effect on overall income.

k = \(\frac{ 1}{ \text 1 - MPC}\)