The ratio of the total increment in equilibrium value of final goods output to the initial increment in autonomous investment expenditure is known as?

Option 1 -> This measures the ratio of change in output to change in autonomous investment, which is the definition given in the question.

Option 2 -> This is not a standard economic term; autonomous refers to expenditure components, not the multiplier itself.

Option 3 -> This relates to money creation in the banking system, not the output-investment relationship.

Option 4 -> This is not a recognized economic term; 'induced' refers to expenditure that depends on income, not a type of multiplier.

Hence, Investment Multiplier -> The investment multiplier (k) is defined as k = ΔY/ΔI, where ΔY represents the total change in equilibrium output and ΔI represents the initial change in autonomous investment. This multiplier effect occurs because the initial investment creates income, which leads to increased consumption, which further increases income, creating a ripple effect throughout the economy. The formula is k = 1/(1-MPC) or 1/MPS, where MPC is the marginal propensity to consume and MPS is the marginal propensity to save. -> correct