The function of the investment multiplier is? Option 1: Y / (Y - ) Option 2: I / Y Option 3: Y / S Option 4: ( Y)/( A)

Answer: ( Y)/( A). Solution: According to NCERT, the investment multiplier is defined as the ratio of the total change in equilibrium output to the initial change in autonomous expenditure. Investment Multiplier = ( Y)/( A) Given that autonomous expenditure includes investment, I = A Multiplier = ( Y)/( A) = ( Y)/( I) From NCERT expression: ( Y)/( A) = 1/(1 - c) where c = mpc Thus, the investment multiplier is expressed as: ( Y)/( A) Option 4 is correct.

Macro

Income & Employment

Easy

The function of the investment multiplier is?

$\Delta Y / \Delta (Y - \Sigma)$

$\Delta I / \Delta Y$

$\Delta Y / \Delta S$

$\dfrac{\Delta Y}{\Delta \bar{A}}$

✅ Correct Option: 4

According to NCERT, the investment multiplier is defined as the ratio of the total change in equilibrium output to the initial change in autonomous expenditure.

$\text{Investment Multiplier} = \dfrac{\Delta Y}{\Delta \bar{A}}$

Given that autonomous expenditure includes investment,

$\Delta I = \Delta \bar{A}$

$\text{Multiplier} = \dfrac{\Delta Y}{\Delta \bar{A}}$

$= \dfrac{\Delta Y}{\Delta I}$

From NCERT expression:

$\dfrac{\Delta Y}{\Delta \bar{A}} = \dfrac{1}{1 - c}$

where $c = \text{mpc}$

Thus, the investment multiplier is expressed as:

$\dfrac{\Delta Y}{\Delta \bar{A}}$

Option 4 is correct.

2025: 28 May Shift 2

Identify the situation in which the equilibrium level of output is less than the full employment level of output?

2022: 10 Aug Shift 2

Which of the following is not a reason for excess demand ?

2026: 11 May Shift 1

Calculate the value of the multiplier and find the value of the consumption quantity that is independent of income from the following equation.

C=150+0.75Y

2024: 16 May

If the supply of final goods is assumed to be infinitely elastic at constant price over a short period of time, aggregate output is determined solely by the value of aggregate demand. This statement is called _________ Principle.

2025: 28 May Shift 2

Arrange the following statement in the context of the effect of an autonomous change in aggregate demand on income and output.

(A) When autonomous investment increases, the aggregate demand shifts in parallel upwards.

(B) Equilibrium level of income depends on aggregate demand.

(D) The output will be greater than the original output.

Choose the correct answer from the options given below:

2026: 6 June Shift 1

When the consumption is changed as per the change in income level such consumption is known as:

The function of the investment multiplier is?

Solution

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