Match each MPC with its investment multiplier.

Match each MPC with its investment… — CUET Economics practice

Question 40

MediumOriginal question

Match each MPC with its investment multiplier.

List I	List II
A. MPC = 0.5	I. 5
B. MPC = 0.75	II. 2
C. MPC = 0.8	III. 10
D. MPC = 0.9	IV. 4

A-II, B-I, C-III, D-IVCorrect answerYour answerA-I, B-II, C-IV, D-IIICorrect answerYour answerA-IV, B-III, C-II, D-ICorrect answerYour answerA-II, B-IV, C-I, D-IIICorrect answerYour answer

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CorrectNot quiteAnswer D

Correct answer: D

k = 1 ÷ (1 − MPC): 1 ÷ 0.5 = 2, 1 ÷ 0.25 = 4, 1 ÷ 0.2 = 5, 1 ÷ 0.1 = 10.

Concept: MPC and multiplier values
Typical timeTypical: 90 s
Your timeYours: —

The rule this testsThe investment multiplier

Practise this chapter →

Ten questions from Income Determination & the Multiplier, at your own pace.

Practise this chapter →

Ten questions from Income Determination & the Multiplier, at your own pace.

Question 40

Explanation