Assertion (A): A higher MPS gives a larger investment multiplier.
Reason (R): The investment multiplier equals 1 ÷ MPS.

Both A and R are true, and R is the correct explanation of A.Correct answerYour answerBoth A and R are true, but R is not the correct explanation of A.Correct answerYour answerA is true, but R is false.Correct answerYour answerA is false, but R is true.Correct answerYour answer

Show the answer and explanation

CorrectNot quiteAnswer D

Correct answer: D

R is true: k = 1 ÷ MPS.
So a higher MPS gives a smaller multiplier, not a larger one. A is false.

Concept: MPS and the multiplier
Typical timeTypical: 70 s
Your timeYours: —

The rule this testsThe investment multiplier

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Assertion (A): A higher MPS gives a larger investment multiplier.Reason (R): The investment multiplier equals 1 ÷ MPS.

Explanation

Assertion (A): A higher MPS gives a larger investment multiplier.
Reason (R): The investment multiplier equals 1 ÷ MPS.