Give the meaning of investment multiplier. Write its formula.

1.	Give the meaning of investment multiplier. Write its formula.
Answer» Investment multiplier is the ratio of the total increment in equilibrium value of final goods output to the initial increment in autonomous expenditure. Its formula is Investment Multiplier = ∆Y/∆A= 1/1-c. Where, ∆Y is the total increment in final goods output, ∆A is initial increment in autonomous expenditure and c is size of the multiplier.

Answer»

Investment multiplier is the ratio of the total increment in equilibrium value of final goods output to the initial increment in autonomous expenditure. Its formula is

Investment Multiplier = ∆Y/∆A= 1/1-c.

Where, ∆Y is the total increment in final goods output, ∆A is initial increment in autonomous expenditure and c is size of the multiplier.

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Give the meaning of investment multiplier. Write its formula.

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