3 years ago

If the marginal propensity to consume is 0.8, (a) what is the value of the multiplier?

1 answer:

7 0

Given the marginal propensity to consume (MPC), the miltiplier is given by

Multiplier = 1 / (1 - MPC)

Given that the marginal propensity to consume is 0.8, the multiplier is given by

Multiplier = 1 / (1 - 0.8) = 1 / 0.2 = 5

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