Question

If the ration of marginal propensity to consume and marginal propensity to save is 4:1, the value of investment multiplier will be 4

Answer 1

Ration of 4:1 between marginal propensity to consume(MPC) and marginal propensity to save (MPC) signifies `MPC=(4)/(5)` or 0.8 and `MPS=(1)/(4)` or 0.2
Investment Multiplier(k)=`(1)/(MPS) =(1)/(0.2)` =5