Question

Explain how the multiplier is related with MPS and MPC. 

Answer 1

Relationship between multiplier and MPS

Since, K = 1 / MPS so the value of multiplier varies inversely with the value of MPS. Higher the value of MPS, the smaller will be the value of multiplier and lower the value of MPS; the larger will be the value of multiplier.

Relationship between multiplier and MPC

Since, K = 1 / 1 - MPC so the value of multiplier varies directly with the value of MPC. Higher the value of MPC, the larger will be the value of multiplier and lower the value of MPC, the smaller will be the value of multiplier.