Question

The multiplier means that an increase in investment results in​ ________ aggregate expenditure that is​ ________ the increase in investment.

Answer 1

Increase in; greater than

Step-by-step explanation:

Investment multiplier refers to the more than proportionate increase in income or aggregate expenditure due to an increase in investment.

The larger the value of the multiplier, the greater will be the increase in aggregate expenditure.

The value of multiplier depends on the marginal propensity to save and marginal propensity to consume.

We can express the value of multiplier as

=
`(1)/(1-MPC) \ or\ (1)/(MPS)`