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Specify the limitations of the multiplier. |
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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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