Match List-I with List-II
| List I | List II |
| (A) MPC | (I) $\frac{1}{1-MPC}$ |
| (B) AD | (II) $\frac{Δc}{Δy}$ |
| (C) k | (III) $C+ I$ |
| (D) If MPC = 0 | (IV) $k = 1$ |
Choose the correct answer from the options given below :
Answer & explanation
Correct answer: option 4
The correct answer is option (D) : (A)-(II), (B)-(III), (C)-(I), (D)-(IV)
-A-II : MPC (Marginal Propensity to Consume) is the change in consumption divided by the change in income $\frac{Δc}{Δy}$
- B-II : AD (Aggregate Demand ) is the sum of consumption and investment (C+I).
- C- I : k= $\frac{1}{1-MPC}$
- D-IV : If MPC is 0, meaning there is no change in consumption with a change in income, the multiplier (k) will become 1