Get Started
Start Free Mocks
CUETMOCK

Ace Your

CUET Preparation Today

Start Free Mocks
Home Questions Z4YFZ9D9Y6
Target Exam

CUET

Subject

Economics

Chapter

Macro Economics: Determination of Income and Employment

Question:

Which of the following statement is true?

Options:

MPC can be greater than 1

MPS can be less than 0.

The value of APC rises with increase in income.

The value of the investment multiplier is always greater than 1.

Correct Answer:

The value of the investment multiplier is always greater than 1.

Explanation:

The correct answer is Option (4) → The value of the investment multiplier is always greater than 1.

The investment multiplier (K) is given by K=1/(1−MPC)= 1/MPS.
Since the marginal propensity to save (MPS) is always between 0 and 1, the denominator is less than 1, making K always greater than 1. 

CUET Questions