The value of the investment multiplier is equal to: MCQ with Answer and Explanation

The value of the investment multiplier is equal to:
A. MPS divided by MPC
B. MPC divided by MPS
C. 1 divided by MPS
D. 1 divided by MPC
Answer: Option C
Solution (By JKSSB Mock Tests)
The investment multiplier is 1/MPS, or 1/(1 - MPC).

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Practice More Economy Set 1 Questions

Question #1
In the context of behavioural economics, 'Default Effects' demonstrate that:
A. Only active choices matter
B. The option that is pre-selected for individuals has a disproportionately large influence on choices
C. Defaults have no effect on behaviour
D. People always opt out of defaults

Correct Answer: Option B


Explanation:
Default effects show that the pre-set option exerts a strong influence on behaviour; many people stick with the default even when opting out is easy, making defaults a powerful policy tool.

This question belongs to: Economy GK Economy Set 1
Question #2
The 'Employees' Provident Fund' contribution is deposited by:
A. employer only
B. employee only
C. both employer and employee
D. government only

Correct Answer: Option C


Explanation:
EPF contribution is made by both employer and employee.

This question belongs to: Economy GK Economy Set 1
Question #3
The term 'J-Curve Effect' in international economics refers to:
A. Continuous deterioration of trade balance
B. No effect of exchange rate on trade balance
C. Initial worsening of trade balance after depreciation followed by improvement
D. Immediate improvement in trade balance after depreciation

Correct Answer: Option C


Explanation:
The J-curve effect describes the pattern where a currency depreciation first worsens the trade balance (due to existing contracts) before improving it as quantities adjust.

This question belongs to: Economy GK Economy Set 1