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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 |
