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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
State whether the following statements are true or false. Give reasons for your answer:
When marginal propensity to consume is greater than marginal propensity to save, the value of investment multiplier will be greater than 5.
✓

Answer

False,
Explanation:
MPC can be greater than MPS, when MPC has value of 0.6, 0.7, 0.8, 0.9 and 1. When MPS is 0.4, multiplier is less than 5, it is 2.5.

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