Check sibling questions

Relation between Investment Multiplier k and MPS

Relationship between K and MPS - Teachoo.JPG

Does K and MPS have Direct Relation or Inverse Relation - Teachoo.JPG

Example 2.

Calculate the value of multiplier if the MPS is:

(a) 0.40;

(b) Equal to MPC

View Answer

Example 9.

Calculate MPS and Multiplier (k) from the following data:

Income (Rs) 100 200
Saving (Rs) 40 100
View Answer

Example 6.

In an economy, the actual level of income is ₹ 500 crores, whereas, the full

employment level of income is ₹ 800 crores. If one-fourth of additional income is saved, calculate

increase in investment required to achieve full employment level of income.

View Answer

Example 8.

In an economy, the equilibrium level of income is ₹ 12,000 crore. The ratio of marginal propensity to consume and marginal propensity to save is 3:1. Calculate the additions investment needed to reach a new equilibrium level of income of ₹ 20,000 crore.

View Answer

Example 20.

In an economy, with every increase in income, 10 per cent of the rise in income is saved. Suppose a fresh investment of ₹ 120 crores takes place in the economy. Calculate the following:

(i) Change in the income;

(ii) Change in consumption.

View Answer

NCERT Questions

No questions in this part

Other Books

Question 1

How is Investment Multiplier related to MPS?

View Answer


K and MPS have Inverse Relation

If MPC increases, K Decreases

IF MPS Decreases, K increases


Question 2

MPS = 0.25

Calculate value of Multiplier

View Answer

Are ads bothering you?


Relationship between K and MPS K We know that MPS We know that MPC+MPS=1 MPS=1-MPC Does K and MPS have Direct Relation or Inverse Relation If MPC Increases, K Decreases If MPS Decreases, K Increases Example If MPC = 0.25 If MPC Increases to 0.5 Hence, if MPS increases from 0.25 to 5 K Decreases from 4 to 2 Both have Inverse Relation

CA Maninder Singh's photo - Expert in Practical Accounts, Taxation and Efiling

Made by

CA Maninder Singh

CA Maninder Singh is a Chartered Accountant for the past 12 years. He also provides Accounts Tax GST Training in Delhi, Kerala and online.