The size of investment multiplier (k) depends on:-
Answer & explanation
Correct answer: option 3
Investment multiplier refers to the increase in the aggregate income of the economy as a result of an increase in the investments done by the government. The ratio of ΔY to ΔI is called the investment multiplier.
K = \(\frac{ΔY}{ΔI}\)
K = \(\frac{1}{\text{1-MPC}}\) = \(\frac{1}{\text{MPS}}\)
Thus, according to the question, we can say that size of the investment multiplier depends on the "Marginal propensity to consume."