Match List-I (marginal propensity to consume) with List-II (investment multiplier):
| List-I | List-II | ||
|---|---|---|---|
| (A) | 0 | (I) | 4 |
| (B) | 0.5 | (II) | 10 |
| (C) | 0.75 | (III) | 1 |
| (D) | 0.9 | (IV) | 2 |
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → (A) - (III), (B) - (IV), (C) - (I), (D) - (II)
The investment multiplier is 1 / (1 − MPC).
| List-I | List-II | Reason |
|---|---|---|
| (A) 0 | (III) 1 | 1 / (1 − 0) = 1 |
| (B) 0.5 | (IV) 2 | 1 / 0.5 = 2 |
| (C) 0.75 | (I) 4 | 1 / 0.25 = 4 |
| (D) 0.9 | (II) 10 | 1 / 0.1 = 10 |
NCERT (2026-27): “where ΔY is the total increment in final goods output and c = mpc . Observe that the size of the multiplier depends on the value of c . As c becomes larger the multiplier increases.” |
