-The above table contains information about the nation of Syldavia. There are no income taxes or imports in this nation. The expenditure multiplier is equal to
A) 10.
B) 2.
C) 1.25.
D) 5.
E) 0.8.

Question

-The above table contains information about the nation of Syldavia. There are no income taxes or imports in this nation. The expenditure multiplier is equal to
A) 10. 
B) 2. 
C) 1.25. 
D) 5. 
E) 0.8.

Quizplus · Accepted Answer

The expenditure multiplier is calculated as 1/(1-MPC), where MPC is the marginal propensity to consume. In the absence of income taxes and imports, the multiplier is typically higher. Assuming a high MPC, the multiplier could be around 5.

-The Above Table Contains Information About the Nation of Syldavia