Assuming no government or foreign sector, if the marginal propensity to consume is 0.8, the multiplier is:

Name: Assuming no government or foreign sector, if the marginal propensity to consume is 0.8, the multiplier is:
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Quizplus · Accepted Answer

The multiplier is calculated as 1/(1-MPC), so in this case, the multiplier would be 1/(1-0.8) = 5. This means that for every additional unit of income received, consumer spending (and therefore, aggregate demand) will increase by five times that amount.

Assuming No Government or Foreign Sector, If the Marginal Propensity