The investment multiplier is given by k=1−MPC1=MPS1. Its size depends directly on the Marginal Propensity to Consume (MPC). Higher MPC leads to a larger multiplier.
The size of investment multiplier (k) depends on:-
Verified 13 Jul 2026.
Average propensity to consume
Average propensity to save
Marginal propensity to consume
Saving function
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Deficient demand is said to exist in the economy when-
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