(i) The Average Propensity to Consume = \(\frac{C}{Y}\)
(ii) The Marginal Propensity to Consume = \(\frac{ΔC}{ΔY}\)
(iii) The Average Propensity to Save = \(\frac{S}{Y}\)
(iv) The Marginal Propensity to Save = \(\frac{ΔS}{ΔY}\)

Keynes's theory of the multiplier works under certain assumptions.
(i) There is change in autonomous investment.
(ii) There is no induced investment.
(iii) The Marginal Propensity to Consume (MPC) is constant.
(iv) Consumption is a function of current income.
(v) No time lags in the multiplier-process.
(vi) Consumer goods are available in response to effective demand for them
(vii) There is a closed economy unaffected by foreign influences.
(viii) No changes in prices.
(ix) Less than full employment level in the economy.

(i) Multiplier highlights the importance of investment in income and employment theory.
(ii) The process throws light on the different stages of trade cycle.
(iii) It also helps in bringing the equality between S and I.
(iv) It helps to reduce unemployment and achieve full employment.

(i) Multiplier expresses the relationship between an initial investment and the final increment in the GNP.
(ii) The magnified or amplified effect of initial investment on income is called as the multiplier effect.
(iii) Multiplier (K) = \(\frac{Change \ in \ equilibrium \ income}{Change \ in \ expenditure}\)
(or) K = \(\frac{ΔY}{ΔI}\) (or) K = \(\frac{1}{1-MPC}\) (or) \(\frac{1}{MPS}\)