What is the spending multiplier if the MPC is equal 0.75?
A) 0.75.
B)1.
C)4.
D) 7.5.

Name: What is the spending multiplier if the MPC is equal 0.75? A) 0.75. B)1. C)4. D) 7.5.
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Quizplus · Accepted Answer

The spending multiplier is equal to 1/MPC. Therefore, if the MPC is equal to 0.75, then the spending multiplier is equal to 1/0.75, which simplifies to 4. This means that for every one unit increase in spending, the total increase in output in the economy will be four times that amount. Therefore, the best choice is option C.

What Is the Spending Multiplier If the MPC Is Equal