Practicing Success

Target Exam

CUET

Subject

Economics

Chapter

Macro Economics: Determination of Income and Employment

Question:

What will be the value of multiplier when the ratio between MPS and MPC Is 1:4?

Options:

5

4

3

1

Correct Answer:

5

Explanation:

\(\frac{MPS}{MPC}\) = \(\frac{1}{4}\)

MPC = 4 MPS 

MPC + MPS = 1

4 MPS + MPS = 1

5MPS = 1

MPS = \(\frac{1}{5}\)

Multiplier = \(\frac{1}{MPS}\) = \(\frac{1}{\frac{1}{5}}\) = 5