If the MPC is .9 and there are no income taxes or imports, the multiplier for a change in autonomous expenditure equals
A) 9.0.
B) 0.1.
C) 100.0.
D) 10.0.

Name: If the MPC is .9 and there are no income taxes or imports, the multiplier for a change in autonomous expenditure equals A) 9.0. B) 0.1. C) 100.0. D) 10.0.
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Question

Quizplus · Accepted Answer

The multiplier is equal to 1/(1-MPC). So, in this case, the multiplier equals 1/(1-0.9) = 1/0.1 = 10.0. Therefore, the correct answer is D.

If the MPC Is