What would be the value of investment multiplier if MPC = MPS ?

4 3 2 1

2

The correct answer is : 2 times. Given MPS=MPC We know that MPC + MPS =1 => 2 MPS= 1 => MPS= 1/2 => MPS= 0.5 The investment multiplier formula is: Multiplier = 1 / 1- MPC                 = 1 / MPS                 =1/0.5                 = 2 Times