Assuming: change in investment , marginal propensity to save (MPS) , marginal propensity to invest (MPI) . The change in income will equal
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4 marks, −1MacroeconomicsKeynesian cross and the multiplierThe investment and expenditure multiplierModerateabout 1 min
CUET-PG 2020 Question 39: Keynesian cross and the multiplier
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Assuming: change in investment Δ I = 25, marginal propensity to save (MPS) = 0.5, marginal propensity to invest (MPI) = 0. The change in income Δ y will equal (A) 25 (B) 50 (C) 200 (D) 100
Also written as: Assuming: change in investment Delta I = 25, marginal propensity to save (MPS) = 0.5, marginal propensity to invest (MPI) = 0. The change in income Delta y will equal
Keynesian cross and the multiplier has come up 167 times in 7 exams since 2006.
What this question tests
This question is on The investment and expenditure multiplier, part of Keynesian cross and the multiplier in Macroeconomics.
Why a change in autonomous spending changes income by a larger amount, and what sets its size.
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