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If the value of Marginal Propensity to Save is 0.4, what will be the value of Investment Multiplier?

+1 vote

asked Mar 19, 2019 in Class 12 by kratos

If the value of Marginal Propensity to Save is 0.4, what will be the value of Investment Multiplier?

aggregate demand
class-12
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1 Answer

+5 votes

answered Feb 6, 2021 by kratos

Best answer

If MPS = 0.4 then value of

K = 1/MPS

= 1/0.4 = 1/1 x 10/4

K = 2.5

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