Range of Investment Multiplier = one to infinity.
Relation: If MPC rises, investment multiplier also rises, positive ,relation, whereas if MPS rises, investment multiplier falls; inverse relation. (Relation to be supported by numerical example or explanation).
Detailed Answer:
Value of Investment Multiplier:
(a) Minimum value of multiplier is 1 because minimum value of MPC can be zero.
(b) Maximum value of multiplier may be-(infinite) because maximum value of MPC can be 1.
Relationship of K (investment multiplier) with MPC and MPS
(i) 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 low.
Thus, k varies directly with value of MPC. In short, higher the value of MPC, higher will be the value of multiplier and vice versa.
(ii) There is inverse relationship between k and MPS. If MPS is high, k will be low but if MPS is low, k will be high.
