1.

Specify the limitations of the multiplier.

Answer»

1. There is change in autonomous investment. 

2. There is no induced investment 

3. The marginal propensity to consume is constant. 

4. Consumption is a function of current income. 

5. There are no time lags in the multiplier process. 

6. Consumer goods are available in response to effective demand for them. 

7. There is a closed economy unaffected by foreign influences. 

8. There are no changes in prices. 

9. There is less than full employment level in the economy.



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