FormulaDen.com

Physics Chemistry Math Chemical Engineering Civil Electrical Electronics Electronics and Instrumentation Materials Science Mechanical Production Engineering Financial Health

Investment Multiplier Formula

Fx Copy

LaTeX Copy

Investment Multiplier refers to the concept that any increase in public or private investment spending has a more than proportionate positive impact on aggregate income and the general economy. Check FAQs

K = \frac{1}{1 - MPC}

K - Investment Multiplier?MPC - Marginal Propensity to Consume?

Investment Multiplier Example

With values

With units

Only example

Here is how the Investment Multiplier equation looks like with Values.

Here is how the Investment Multiplier equation looks like with Units.

Here is how the Investment Multiplier equation looks like.

5 = \frac{1}{1 - 0.8}

5 = \frac{1}{1 - 0.8}

5 = \frac{1}{1 - 0.8}

Tip: Use pencil ( Pencil

) icon above to edit Input Values and Units.

Calculate

Recalculate

Solution

Copy

Reset

You are here -

Home » Category

Financial » Category

Economy » Category

Microeconomics » fx Investment Multiplier

Investment Multiplier Solution

Follow our step by step solution on how to calculate Investment Multiplier?

FIRST Step Consider the formula

K = \frac{1}{1 - MPC}

Next Step Substitute values of Variables

∴

K = \frac{1}{1 - 0.8}

Next Step Prepare to Evaluate

∴

K = \frac{1}{1 - 0.8}

LAST Step Evaluate

∴

K = 5

Investment Multiplier Formula Elements

Variables

Investment Multiplier

Investment Multiplier refers to the concept that any increase in public or private investment spending has a more than proportionate positive impact on aggregate income and the general economy.

Symbol: K

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Investment Multiplier

Marginal Propensity to Consume

Marginal Propensity to Consume refers to the proportion of an additional unit of income that a consumer spends on consumption.

Symbol: MPC

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Marginal Propensity to Consume

Other formulas in Microeconomics category

Go Average Total Cost

ATC = \frac{Tc}{Q}

Go Gross Domestic Product

GDP = PCN + GI + G + NX

Go Rate of Inflation

R = \frac{ECPI - ICPI}{ICPI}

Go Net Exports of Goods and Services

NX = X - M

How to Evaluate Investment Multiplier?

Investment Multiplier evaluator uses Investment Multiplier = 1/(1-Marginal Propensity to Consume) to evaluate the Investment Multiplier, Investment Multiplier refers to the number of time by which the increase in output or income exceeds the increase in investment. Investment Multiplier is denoted by K symbol.

How to evaluate Investment Multiplier using this online evaluator? To use this online evaluator for Investment Multiplier, enter Marginal Propensity to Consume (MPC) and hit the calculate button.

FAQs on Investment Multiplier

What is the formula to find Investment Multiplier?

The formula of Investment Multiplier is expressed as Investment Multiplier = 1/(1-Marginal Propensity to Consume). Here is an example- 5 = 1/(1-0.8).

How to calculate Investment Multiplier?

With Marginal Propensity to Consume (MPC) we can find Investment Multiplier using the formula - Investment Multiplier = 1/(1-Marginal Propensity to Consume).

Let Others Know

✖

Facebook

Twitter

Copied!

: Value
: Unit