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Land utilisation

  LAND UTILIZATION  Land is a scarce resource, whose supply is fixed for all practical purposes. At the same time, the demand for land for various competing purposes is continuously increasing with the increase in human population and economic growth.Land use pattern at any given time is determined by several factors including size of human and livestock population, the demand pattern, the technology in use, the cultural traditions, the location and capability of land, institutional factors like ownership pattern and rights scale regulation. Major Types of Land Utilization in India : As in all other countries, land in India is put to various uses. The utilization of land depends upon physical factors like topography, soil and climate as well as upon human factors such as the density of population, duration of occupation of the area,land tenure and technical levels of the people.There are spatial and temporal difference in land utilization due to the continued interplay of phys...
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Investment Multiplier

INVESTMENT MULTIPLIER

The number of times by which the increase in ∆Y exceeds the increase in investment is called as Investment Multiplier. 
Investment Multiplier or output multiplier refers to the number of times by which the increase in output/income ∆Y exceeds the increase in investment ∆I. It is measures as the ratio between change in output /income and change in investment.
                
                    k = ∆Y / ∆I

Where k is the multiplier.

Relationship between Multiplier and Marginal propensity to consume (MPC)

There is direct relationship between Multiplier and MPC . Higher the value of MPC ,higher the multiplier .
                  K =1 / 1- MpC

This is because of the given reasons :
a)Additional investment means additional expenditure in the economy, additional expenditure means additional income .
b) Higher the value of MPC ,higher is generation of income caused by a given increase in investment.
c) Also, Investment Multiplier works with the change in consumption as someone's consumption becomes other's income.

Forward and backward action of multiplier

Forward action : Multiplier action is said to be forward when there is a multiple increase in income caused by an increase in investment.Here,the aggregate demand function shifts upward and level of income increases.
Backward action : Multiplier action is said to be backward when there is multiple decrease in income caused by decrease in investment.
Here, the aggregate demand function shifts downward and the level of income decreases.

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