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What is the practical importance of multiplier ? |
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Answer» Multiplier explains the importance of investment in the principle of Income and Employment. National Income increases many times, when the investment increases. It helps in understanding the business cycles. Multiplier is also a base which helps in policy making. Equilibrium can be established between savings and investment with the help of multiplier. It also determines the level of increment needed in investment to achieve the target of full employment. |
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