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
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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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