Q.3. Find MPC when investment multiplier = 1. – InterviewSolution

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Q.3. Find MPC when investment multiplier = 1.

Answer»

Explanation:

When investment multiplier is 1, the value of marginal PROPENSITY to consume is zero.

Multiplier(k) = 1/( 1 - MPC)

=> 1/ (1-MPC ) = 1.

=> 1= 1- MPC.

=> MPC = 1-1 = 0.

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