Question
What can be minimum value of multiplier and why?
Solution
Minimum and maximum value of multiplier. Value of K depends upon value of MPC or MPS. We know size of MPC cannot be negative, it can be, at the most, zero (minimum value) and maximum value can be 1. Let us take two extreme values (1 and 0) of MPC to find out value of K.
(i) Minimum value of multiplier is l. How?
When MPC = 0, then MPS = 1 – 0 = 1. Hence,
(ii) Maximum value of K may be ∞ (infinity). How?
When MPC = 1, then MPS = 1 – 1 = 0. Hence
Between these two extremes (1 and infinity), value of multiplier varies depending upon value of MPC.
(i) Minimum value of multiplier is l. How?
When MPC = 0, then MPS = 1 – 0 = 1. Hence,
(ii) Maximum value of K may be ∞ (infinity). How?
When MPC = 1, then MPS = 1 – 1 = 0. Hence
Between these two extremes (1 and infinity), value of multiplier varies depending upon value of MPC.
