The formula for the multiplier is
A)1/(1 - MPS).
B)1/(1 - MPC).
C)1 - MPS.
D)1 - MPC.

Name: The formula for the multiplier is A)1/(1 - MPS). B)1/(1 - MPC). C)1 - MPS. D)1 - MPC.
Brand: Quizplus
Rating: 5.0 (32 reviews)

Question

Quizplus · Accepted Answer

The formula for the multiplier is 1/(1 - MPC). This means that the multiplier is equal to 1 divided by the portion of income that is not spent (MPC). As the MPC increases, the multiplier decreases, and vice versa. Therefore, the higher the MPC, the greater the multiplier effect on total spending in the economy.

The Formula for the Multiplier Is