The ratio of ΔY to ΔI is called the investment multiplier. It can be derived, as follows, from the equilibrium condition (Y = C + I + G) together with the consumption equation (C = a + bY). … This equation describes the new equilibrium, once the economy has adjusted to the increase in the level of investment.

## How do you find the investment multiplier example?

The essence of multiplier is that total increase in income, output or employment is manifold the original increase in investment. For example, **if investment equal to Rs.** **100 crores is made, then the income will not rise by Rs.** **100 crores only but a multiple of it**.

## What is multiplier example?

The meaning of the word multiplier is **a factor that amplifies or increases the base value of something else**. For example, in the multiplication statement 3 × 4 = 12 the multiplier 3 amplifies the value of 4 to 12. … When we multiply two numbers the order does not matter. That is, 2 × 3 = 3 × 2.

## What are the types of multiplier?

**3 Different Types of Multipliers**

- Modified booth/booth multiplier [3, 9]
- Array multiplier [6]
- Wallace tree multiplier [2, 5]
- Combinational multiplier [2]
- Sequential multiplier [1, 21]
- Logarithm multiplier [14, 15, 17, 18].

## What is investment multiplier and its working?

Investment multiplier refers to **the number of time by which the increase in output or income exceeds the increase in investment**. It is measured as the ratio between change in income and change in investment. For example investment is increased by 1,000 crore rupees, now. Particulars. Increase in Income.

## What is the value of multiplier when MPC is zero?

When marginal propensity to consume is zero, the value of investment multiplier will also be **zero**.

## What can be the minimum value of investment multiplier?

(i) Minimum value of multiplier is **1** because minimum value of MPC can be zero. (ii) Maximum value of multiplier may be – (infinity) because maximum value of MPC can be 1.

## What is the importance of multiplier?

Multiplier **helps in estimating the increase in income as a result of increase in investment**. So, multiplier will be of great importance in formulating progressive policies to bring the effects in the economy to right speed.

## What is theory of multiplier?

The Concept of Multiplier: The theory of multiplier occupies an important place in the modern theory of income and employment. … The essence of multiplier is that **total increase in income, output or employment is manifold the original increase in investment**. For example, if investment equal to Rs.