1.

What is meant by investment multiplier?

Answer»

An investment multiplier refers to the fact that an increase in private or public investment expenditure leads to a more than proportionate increase in the level of national output. The investment multiplier is calculated as the ratio of change in income to the change in investment. Investment multiplier = ∆Y/∆I

where ∆Y = change in income

∆I = change in investment.



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