If $k=\frac{1}{1-c}$ and
K = Investment Multiplier, then c is
Answer & explanation
Correct answer: option 2
The correct answer is Option 2: Marginal Propensity to Consume
c= Marginal Propensity to Consume
The investment multiplier is a key concept in Keynesian economics, according to which, an increase in public or private investments will cause a country’s GDP to increase by a value more than the original investment amount. Such investments can be made through private consumption spending or government spending in the economy.
K = 1 / (1 - MPC).