If the multiplier = 2.5, the MPS would be
A) 0.25.
B) 0.4.
C) 0.6.
D) 0.75.

Name: If the multiplier = 2.5, the MPS would be A) 0.25. B) 0.4. C) 0.6. D) 0.75.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

The marginal propensity to save (MPS) is the fraction of a change in income that is saved. The multiplier is the inverse of the MPS, i.e., 1/MPS. Since the multiplier is given as 2.5, we can find the MPS by taking its inverse as follows:
MPS = 1/2.5 = 0.4.
Therefore, the answer is B.

If the Multiplier = 2