When investment expenditure increases, there is multiple increase in income. The rates of increase in income to increase in investment expenditure are the value of multiplier. Its value equals
1/1-MPC or 1/MPS or △Y/△I
Its minimum value is ‘one’ while the maximum value is infinity.
Detailed Answer:
Investment Multiplier-The ratio of increase inincome to increase in investment (△Y/△I) is called
Investment Multiplier.
Investment Multiplier, K = 1/MPS or K = 1/1-MPC
The minimum value of K may be 1 and maximum value is ∞ (infinity)
