If the value of marginal propensity to consume (MPC) is 0.8, the value of the multiplier will be-

Correct option is A

The correct answer is (a) 5.

The marginal propensity to consume is a component of Keynesian macroeconomic theory and is calculated as the change in consumption divided by the change in income. The marginal propensity to consume is equal to ΔC / ΔY, where ΔC is the change in consumption, and ΔY is the change in income.

Investment multiplier refers to the number of times 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 and it is denoted as 'k'.

If MPC= 0.8, then

Multiplier(k) = 1/( 1 - 0.8) = 1/ 0.2 = 10/2 = 5 times.