CUET UG 2025 — Economics Macro

According to NCERT, the investment multiplier is defined as the ratio of the total change in equilibrium output to the initial change in autonomous expenditure.

$$\text{Investment Multiplier} = \dfrac{\Delta Y}{\Delta \bar{A}}$$Investment Multiplier=ΔAˉΔY​

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Given that autonomous expenditure includes investment,

$$\Delta I = \Delta \bar{A}$$ΔI=ΔAˉ

$$\text{Multiplier} = \dfrac{\Delta Y}{\Delta \bar{A}}$$Multiplier=ΔAˉΔY​

$$= \dfrac{\Delta Y}{\Delta I}$$=ΔIΔY​

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From NCERT expression:

$$\dfrac{\Delta Y}{\Delta \bar{A}} = \dfrac{1}{1 - c}$$ΔAˉΔY​=1−c1​

where $c = \text{mpc}$c=mpc

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Thus, the investment multiplier is expressed as:

$$\dfrac{\Delta Y}{\Delta \bar{A}}$$ΔAˉΔY​

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Option 4 is correct.