The multiplier process of symmetric occurs for both increases and decreases in investment. Just as an increase in investment results in multiple expansion of income in the same way, a decrease in initial investment causes a multiple decline in the level of income. Suppose, the investment decreases by Rs. 100 crores, and the marginal propensity to consume is 0.75. The total decline in the level of income will be of the order of Rs. 400 crores, i.e.,

ΔY = 1/1-0.75

= 1/0.25ΔI

= (4) ΔI

ΔI given as Rs. 100 crores, we get

ΔY = 4 x – Rs. 100 crores
 = (-) Rs. 400 crores.

Thus, the total decline will be Rs. 400 crores, obtained by multiplying the initial decline in investment, -Rs. 100 crores, by the investment multiplier 4.

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