What is the relation between mulriplier and MPC?

Question

Answer

There is direct relationship between K and MPC. If MPC is high, K will also be high but if MPC is low, K will also be small as proved in the following examples....Suppose MPC is 3/4 Then K =1/1-3/4. i.e.1/1/4=4Now let us assume MPC as4/5Then K =1/1-4/5 i.e.1/1/5=5This states that.......K has gone up from 4-5 as in the above eg so..this proves that...higher the value of MPC, higher will be the value of multiplier. Lower the value of MPC, lower will be the value of multiplier (K).....Hope u've understood...iss eg ko nbk mei likhkar phir aage padhna u will understand better...

Answer

See higher the value of MPC  higher will be the value of multiplier. Bcz of two rzns -First, the increase in MPC implies increase in consumption and increase in consumption implies increase in income and multiplier=change in income/change in investment. Secondly, higher the value of MPC less will be MPS and multiplier=1/MPS.

Answer

There is a direct relationship between MPC and Multiplier as higher the MPC higher will be the multiplier.

Answer

Multiplier(k)=1/1-MPC OR MPC=1-1/K

Answer

The higher the MPC, the higher the multiplier and vice versa. The relationship between the multiplier and the propensity to consume is as follows: ... On the other hand, an infinite multiplier implies that MPC is equal one and the entire increment of income is spent on consumption.

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