If the MPC equals 0.80 then:
A)the MPS equals 1.20.
B)the multiplier equals 0.20.
C)the multiplier equals 1 divided by 0.80.
D)the multiplier equals 5.
E)none of these.

Name: If the MPC equals 0.80 then: A)the MPS equals 1.20. B)the multiplier equals 0.20. C)the multiplier equals 1 divided by 0.80. D)the multiplier equals 5. E)none of these.
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Question

Quizplus · Accepted Answer

The multiplier is calculated as 1/(1-MPC). With an MPC of 0.80, the multiplier is 1/(1-0.80) = 1/0.20 = 5.

If the MPC Equals 0.80 Then