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

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asked Sep 4, 2018 120k views

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Vana · Answer 1 · 2018-09-09T08:25:59+0000

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

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

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