Giving reasons, state whether the following statements are true or false.
(i) When MPC is zero, the value of investment multiplier will also be zero.
(ii) Value of Average Propensity to Consume can never be less than zero.
(i) No, the statement is false. When MPC is zero, the value of investment multiplier will be 1.
K = 1 / 1 - MPC or K = 1/ 1-0 = 1/1 = 1
(ii) Yes, the statement is true. As consumption can never be zero or negative, hence, APC is always positive.