The ratio of the total increment in equilibrium value of final goods to the initial increment in autonomous expenditure is called ______.
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → Investment Multiplier
The ratio of the total increment in equilibrium value of final goods output to the initial increment in autonomous expenditure is called the investment multiplier of the economy.
The investment multiplier = 1/ (1-c) = 1/MPS