Practicing Success

Target Exam

CUET

Subject

Economics

Chapter

Macro Economics: Determination of Income and Employment

Question:

Which two terms are inversely related?

Options:

MPC and multiplier

MPS and multiplier

Consumption and saving

Consumption and investment

Correct Answer:

MPS and multiplier

Explanation:

As, k=\(\frac{1 }{ MPS}\)
If MPS is 0.2 k= 5 and,
MPS is 0.5 k= 2 Thus, we can say MPS and k works in opposite direction and are inversely related.