Select the correct statement.

Question

Question

This question was previously asked in

RRB Group D 8 Sept 2022 Shift 3 Official Paper

Answer 1

The correct answer is Investment multiplier is positively related to MPC.

Key Points:

The stimulating impacts of governmental or private investments are referred to as the investment multiplier.
It is based on John Maynard Keynes' economic theories.
The marginal propensity to save (MPS) and the marginal propensity to consume (MPC) determine the size of the investment multiplier (MPS).
An investment's potential to stimulate the economy more strongly is indicated by a higher investment multiplier.

Additional Information:

The percentage of additional income that is spent on consumption is known as the marginal propensity to consume.
Depending on income, MPC fluctuates.
MPC tends to be lower at higher income levels.
The Keynesian multiplier, which describes the impact of the additional investment or government spending as an economic stimulus, is mostly determined by MPC.