Figure 9-5

-In Figure 9-5, if the second round effect of an increase in autonomous spending of $100,000 is $75,000, then the multiplier is

Name: Figure 9-5 -In Figure 9-5, if the second round effect of an increase in autonomous spending of $100,000 is $75,000, then the multiplier is
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Question

Figure 9-5
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-In Figure 9-5, if the second round effect of an increase in autonomous spending of $100,000 is $75,000, then the multiplier is

Quizplus · Accepted Answer

The multiplier is calculated as 1/(1-MPC), where MPC is the marginal propensity to consume. In this case, the multiplier is 1/(1-0.75) = 4. Therefore, the best choice is C.

Figure 9-5 ​

Figure 9-5