Practicing Success
When the value of MPC is 1, the value of the investment multiplier will be ____________. |
1 0 ∞ Value of MPC cannot be 1. |
Value of MPC cannot be 1. |
MPC and multiplier have positive relation. When MPC is maximum, then multiplier will be maximum. Maximum MPC can have value 1 as MPC + MPS =1. So, when MPC = 1, then multiplier = \(\frac{ 1}{\text {1 - MPC}}\) = \(\frac{1 }{\text 1 - 1 }\) = C |