Question

Multiplier is a two edged sword why ? 1 Because it has a negative relation 1 MPS and MPC 2 Because it works forward and backward both 3 both a and b correct 4 none of these ​

Answer 1

Explanation:

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Answer 2

The correct answer to this question is option 2) Because it works forward and backward both.

Explanation:

• Investment multiplier function in both directions: forward in addition to backward.  

• Investment multiplier discloses that if the investment is increased by a slight amount, it will lead to a manifold increase in income.  

• Likewise, if the investment is reduced by some amount it will lead to a compound fall in the income.  

• In this way, a multiplier can get the investor a huge amount of profit but can also lead to unprecedented losses.

• It is termed as a double-edged sword as it can benefit you as well as bring you loss.