Arrange the following steps in the correct sequence to explain the working of Multiplier.

(A) Increase in income and consumption.
(B) Increase in investment.
(C) Rise in aggregate demand in each round
(D) Generation of additional income.

Choose the correct answer from the options given below:

(B), (C), (D), (A)

The correct answer is Option (4) → (B), (C), (D), (A)

Note: The given answer is as per NTA. However, this answer is in contradiction to the NCERT as explained below. 

The multiplier process begins with an initial increase in investment, which leads to multiple rounds of income generation and consumption. According to the NCERT explanation of the multiplier mechanism:

• First, there is an increase in investment (B). The multiplier process starts with an autonomous increase in investment, such as the government building infrastructure or private firms investing in capital goods.This initial investment injects new money into the economy, creating income for others (like wages for workers, payments to suppliers, etc.).
• This immediately leads to generation of additional income, as factors of production receive income.(D)
• Then, a part of this income is spent, leading to increase in consumption (A). The people who earn this additional income spend a portion of it (based on their marginal propensity to consume or MPC). This induces further consumption, which leads to more income and employment in subsequent rounds.
• This consumption causes a rise in aggregate demand in successive rounds (C). The increased investment raises aggregate demand because more people now have money to spend. As demand for goods and services rises, firms produce more to meet that demand. This leads to further income generation, not just from the initial round but from every additional round of spending.

This cycle continues, causing a multiplied effect on income.

Thus, as per NCERT, the correct sequence should be BDAC. however, no such option is there. Hence, the question seems to have a mistake. But this question was not dropped by NTA and Option 4 was taken as the correct answer.