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.

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.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

The multiplier is calculated as 1/(1-MPC). If MPC is 0.80, then the multiplier is 1/(1-0.80) = 1/0.20 = 5.

If the MPC Equals 0.80 Then