Question

explain the working of investment multiplier point out the leakages of the multiplier​

Answer 1

Therefore, whereas Kahn’s multiplier is known as ’employment multiplier’, Keynes’ multiplier is known as investment or income multiplier. The essence of multiplier is that total increase in income, output or employment is manifold the original increase in investment. For example, if investment equal to Rs. 100 crores is made, then the income will not rise by Rs. 100 crores only but a multiple of it.

If as a result of the investment of Rs. 100 crores, the national income increases by Rs. 300 crores,