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Question : The value of the investment multiplier relates to

Option 1: change in income due to change in autonomous investment

Option 2: change in autonomous investment due to change in income

Option 3: change in income due to change in consumption

Option 4: change in the income due to change in induced investment


Team Careers360 9th Jan, 2024
Answer (1)
Team Careers360 21st Jan, 2024

Correct Answer: change in autonomous investment due to change in income


Solution : The correct answer is a change in autonomous investment due to a change in income .

The investment multiplier's value is proportional to the revenue change caused by autonomous investment changes. The marginal propensity to consume (MPC) determines the investment multiplier's value. The MPC is the percentage of extra money spent by consumers.

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