Macro

Income & Employment

Easy

Which one of the following is correct formula for deriving the investment multiplier?

A. 1/(1 - MPC)

B. 1/MPS

C. 1/(1 - MPS)

D. (1 - MPC)/MPS

Choose the correct answer from the options given below:

A and B only

A, B and C only

B, D and C only

A, B and D only

✅ Correct Option: 1

The investment multiplier is $k = \frac{1}{1-MPC}$ , and since $MPS = 1 - MPC$ , equivalently $k = \frac{1}{MPS}$ . $\frac{1}{1-MPS} = \frac{1}{MPC}$ is not the multiplier, and $\frac{1-MPC}{MPS} = 1$ . Hence A and B only.

2026: 6 June Shift 1

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

2026: 12 May Shift 1

An increase in government spending will lead to _________

2025: 30 May Shift 2

When the aggregate output is determined solely by the level of aggregate demand. Then what it called?

2026: 20 May Shift 1

Match List-I with List-II

List-I	List-II
(A) Aggregate demand (AD)	(I) C/Y
(B) Marginal propensity to consume (MPC)	(II) S/Y
(C) Average propensity to consume (APC)	(III) C + I
(D) Average propensity to save (APS)	(IV) ΔC/ΔY

Choose the correct answer from the options given below:

2025: 27 May Shift 2

Arrange the following statements about the effect of an increase in taxes on total income and output.

(A) An increase in taxes decreases disposable income.

(B) Aggregate demand schedule shifts downwards.

(D) Equilibrium output decreases.

2026: 13 May Shift 1

The change in consumption per unit change in income is known as:

Which one of the following is correct formula for deriving the investment multiplier? A. 1/(1 - MPC) B. 1/MPS C. 1/(1 - MPS) D. (1 - MPC)/MPS Choose the correct answer from the options given below:

Solution

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CUET Economics Past Year Questions (Topic-Wise)

Which one of the following is correct formula for deriving the investment multiplier?

A. 1/(1 - MPC)

B. 1/MPS

C. 1/(1 - MPS)

D. (1 - MPC)/MPS

Choose the correct answer from the options given below: