The range of value of investment multiplier is always between ______ and ______.

one (+1); infinity (∞)

The correct answer is Option (2) → one (+1); infinity (∞)

The investment multiplier (K) is defined as: K = 1 / (1 – MPC)
Where MPC is the marginal propensity to consume.

• Since MPC lies between 0 and 1, the value of the multiplier will always be greater than 1.

• When MPC = 0 (meaning MPS = 1): This implies that all additional income is saved, and nothing is consumed. Hence, k =1. In this case, the increase in income is exactly equal to the initial investment, so the multiplier is 1.

• When MPC = 1 (meaning MPS = 0): This implies that all additional income is consumed, and nothing is saved. k = 1/ 0 $=\text{infinity (∞). In this theoretical case, the spending chain continues indefinitely, leading to an infinitely large increase in income.}$

• Therefore, the range of the investment multiplier is more than 1 and up to infinity.