Which of the following statement is true?

Option 1 -> MPC (Marginal Propensity to Consume) ranges between 0 and 1, cannot exceed 1.

Option 2 -> MPS (Marginal Propensity to Save) ranges between 0 and 1, cannot be negative.

Option 3 -> APC (Average Propensity to Consume) generally falls as income rises, not increases.

Option 4 -> Investment multiplier = 1/(1-MPC) or 1/MPS, always greater than 1.

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The correct answer is Option 4: The value of the investment multiplier is always greater than 1.

In the standard Keynesian framework, the investment multiplier is:

$$k = \frac{1}{1 - MPC} = \frac{1}{MPS}$$k=1−MPC1​=MPS1​

Since (0 < MPC < 1), it follows that (0 < MPS < 1). Therefore, the multiplier must always be greater than 1.

The other statements are false. MPC cannot be greater than 1, APC generally falls as income increases, and MPS is taken to lie between 0 and 1 in the usual textbook framework.

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NTA has marked Option - 4 as correct. Standard competitive exams often frame this question under the assumption of a functioning, realistic economy.