Question

Prove that there is an inverse relation between Investment Multiplier and Marginal Propensity to Save.

Answer 1

Answer:

The ratio of ΔY to ΔI is called the investment multiplier. It can be derived, as follows, from the equilibrium condition (Y = C + I + G) together with the consumption equation (C = a + bY).

Explanation:

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Answer 2

Answer:

The ratio of ΔY to ΔI is called the investment multiplier. It can be derived, as follows, from the equilibrium condition (Y = C + I + G) together with the consumption equation (C = a + bY).