Question

If the marginal propensity to consume is lesser than marginal propensity to save, the value of the multiplier will be
a. greater than 2
b. less than 2
c. equal to 2
d. equal to 5​

Answer 1

Answer:

b) Less than 2

Explanation:

See

we know that Multiplier is directly related MPC and inversely related to MPS.

k = 1/1-MPC

OR

k = 1/ MPS

let MPC = 0 & MPS = 1

k = 1/1-0

= 1 .

Which is less than 2.

Samjh me aaya kya ??

Answer 2

Answer:

Option b. less than 2

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