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Determination of Income and Employment — Economics STD 12 Humanities & Commerce — Question

Rajasthan BoardEnglish MediumSTD 12 Humanities & CommerceEconomicsDetermination of Income and Employment1 Mark
Question
Giving reasons, state whether the following statement are true or false;
When marginal propensity to consume is zero, the value of investment multiplier will also be zero.
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Answer

False. Explanation: When MPC = 0, the value of investment multiplier will not be zero but equal to 1.$\text{k}=\frac{1}{1-\text{MPC}}=\frac{1}{1-0}=\frac{1}{1}=1$

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