If the multiplier is 3.33 and there are no imports or income taxes, then the
A) MPS is 0.3.
B) MPC is 0.7.
C) Both of the above answers are correct.
D) None of the above answers are correct.

Question

Quizplus · Accepted Answer

The multiplier is calculated as 1/MPS, where MPS is the marginal propensity to save. If the multiplier is 3.33, then the MPS is 0.3 (1/3.33). Therefore, the MPC (marginal propensity to consume) is 0.7 (1 - 0.3). Both options A and B are correct, so the answer is C.

If the Multiplier Is 3