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Which one of the following combinations are correct?

(A) ΔC/ΔY=Marginal Propensity to Consume (MPC).

(B) ΔS/ΔY=Marginal Propensity to Save (MPS).

(C) 1/1-APS=Investment Multiplier.

(D) 1/1- C=Investment Multiplier.

Choose the correct answer from the options given below:

Solution

✅ Correct Option: 4

ΔC/ΔY\Delta C/\Delta Y is MPC (A correct) and ΔS/ΔY\Delta S/\Delta Y is MPS (B correct). The investment multiplier is 11−c\frac{1}{1-c} where cc is MPC, so (D) is correct. It is not 11−APS\frac{1}{1-APS}; the correct saving-based form is 1/MPS1/MPS, so (C) is incorrect. Hence (A), (B) and (D) only.

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