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Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:
Assertion (A): The maximum value of investment multiplier is equal to infinity.
Reason (R): The maximum value of investment multiplier is ∞, when MPC is 1, i.e., whole additional income is converted into additional consumption.
- a)Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).
- b)Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).
- c)Assertion (A) is true, but Reason (R) is false.
- d)Assertion (A) is false, but Reason (R) is true.
Correct answer is option 'A'. Can you explain this answer?
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Directions : In the following questions, a statement of Assertion (A...
K = 1/1 – MPC
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= 1/1 – 1
= 1/0 = ∞
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Directions : In the following questions, a statement of Assertion (A...
Assertion (A): The maximum value of investment multiplier is equal to infinity.
Reason (R): The maximum value of investment multiplier is ∞, when MPC is 1, i.e., whole additional income is converted into additional consumption.
The correct answer is option 'A'.
Explanation:
The investment multiplier is a concept in economics that measures the change in national income resulting from a change in investment. It shows the relationship between changes in investment and changes in national income.
The investment multiplier can be calculated using the formula:
Multiplier = 1 / (1 - MPC)
Where MPC is the marginal propensity to consume, which represents the proportion of additional income that is spent on consumption. The MPC ranges from 0 to 1.
Maximum Value of Investment Multiplier:
The maximum value of the investment multiplier occurs when the MPC is equal to 1. In this case, all additional income is converted into additional consumption, resulting in a larger increase in national income.
When the MPC is equal to 1, the formula for the investment multiplier becomes:
Multiplier = 1 / (1 - 1) = 1 / 0 = ∞
This means that the investment multiplier is infinite when the MPC is 1. In other words, a given change in investment will result in an infinite increase in national income.
Explanation of Assertion (A) and Reason (R):
- Both Assertion (A) and Reason (R) are true.
- The maximum value of the investment multiplier is indeed equal to infinity when the MPC is 1.
- This is because when the MPC is 1, all additional income is converted into additional consumption, leading to an infinite increase in national income.
- Therefore, Reason (R) is the correct explanation of Assertion (A).
Conclusion:
The maximum value of the investment multiplier is indeed equal to infinity when the MPC is 1. This occurs because all additional income is converted into additional consumption, resulting in an infinite increase in national income.
Reason (R): The maximum value of investment multiplier is ∞, when MPC is 1, i.e., whole additional income is converted into additional consumption.
The correct answer is option 'A'.
Explanation:
The investment multiplier is a concept in economics that measures the change in national income resulting from a change in investment. It shows the relationship between changes in investment and changes in national income.
The investment multiplier can be calculated using the formula:
Multiplier = 1 / (1 - MPC)
Where MPC is the marginal propensity to consume, which represents the proportion of additional income that is spent on consumption. The MPC ranges from 0 to 1.
Maximum Value of Investment Multiplier:
The maximum value of the investment multiplier occurs when the MPC is equal to 1. In this case, all additional income is converted into additional consumption, resulting in a larger increase in national income.
When the MPC is equal to 1, the formula for the investment multiplier becomes:
Multiplier = 1 / (1 - 1) = 1 / 0 = ∞
This means that the investment multiplier is infinite when the MPC is 1. In other words, a given change in investment will result in an infinite increase in national income.
Explanation of Assertion (A) and Reason (R):
- Both Assertion (A) and Reason (R) are true.
- The maximum value of the investment multiplier is indeed equal to infinity when the MPC is 1.
- This is because when the MPC is 1, all additional income is converted into additional consumption, leading to an infinite increase in national income.
- Therefore, Reason (R) is the correct explanation of Assertion (A).
Conclusion:
The maximum value of the investment multiplier is indeed equal to infinity when the MPC is 1. This occurs because all additional income is converted into additional consumption, resulting in an infinite increase in national income.
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Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:Assertion (A): The maximum value of investment multiplier is equal to infinity.Reason (R): The maximum value of investment multiplier is ∞, when MPC is 1, i.e., whole additional income is converted into additional consumption.a)Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).b)Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).c)Assertion (A) is true, but Reason (R) is false.d)Assertion (A) is false, but Reason (R) is true.Correct answer is option 'A'. Can you explain this answer?
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Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:Assertion (A): The maximum value of investment multiplier is equal to infinity.Reason (R): The maximum value of investment multiplier is ∞, when MPC is 1, i.e., whole additional income is converted into additional consumption.a)Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).b)Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).c)Assertion (A) is true, but Reason (R) is false.d)Assertion (A) is false, but Reason (R) is true.Correct answer is option 'A'. Can you explain this answer? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:Assertion (A): The maximum value of investment multiplier is equal to infinity.Reason (R): The maximum value of investment multiplier is ∞, when MPC is 1, i.e., whole additional income is converted into additional consumption.a)Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).b)Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).c)Assertion (A) is true, but Reason (R) is false.d)Assertion (A) is false, but Reason (R) is true.Correct answer is option 'A'. Can you explain this answer? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:Assertion (A): The maximum value of investment multiplier is equal to infinity.Reason (R): The maximum value of investment multiplier is ∞, when MPC is 1, i.e., whole additional income is converted into additional consumption.a)Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).b)Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).c)Assertion (A) is true, but Reason (R) is false.d)Assertion (A) is false, but Reason (R) is true.Correct answer is option 'A'. Can you explain this answer?.
Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:Assertion (A): The maximum value of investment multiplier is equal to infinity.Reason (R): The maximum value of investment multiplier is ∞, when MPC is 1, i.e., whole additional income is converted into additional consumption.a)Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).b)Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).c)Assertion (A) is true, but Reason (R) is false.d)Assertion (A) is false, but Reason (R) is true.Correct answer is option 'A'. Can you explain this answer? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:Assertion (A): The maximum value of investment multiplier is equal to infinity.Reason (R): The maximum value of investment multiplier is ∞, when MPC is 1, i.e., whole additional income is converted into additional consumption.a)Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).b)Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).c)Assertion (A) is true, but Reason (R) is false.d)Assertion (A) is false, but Reason (R) is true.Correct answer is option 'A'. Can you explain this answer? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:Assertion (A): The maximum value of investment multiplier is equal to infinity.Reason (R): The maximum value of investment multiplier is ∞, when MPC is 1, i.e., whole additional income is converted into additional consumption.a)Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).b)Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).c)Assertion (A) is true, but Reason (R) is false.d)Assertion (A) is false, but Reason (R) is true.Correct answer is option 'A'. Can you explain this answer?.
Solutions for Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:Assertion (A): The maximum value of investment multiplier is equal to infinity.Reason (R): The maximum value of investment multiplier is ∞, when MPC is 1, i.e., whole additional income is converted into additional consumption.a)Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).b)Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).c)Assertion (A) is true, but Reason (R) is false.d)Assertion (A) is false, but Reason (R) is true.Correct answer is option 'A'. Can you explain this answer? in English & in Hindi are available as part of our courses for Commerce.
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