Use the figure below to answer the following question.

Figure 27.3.2
-In Figure 27.3.2, the multiplier is
A)0.25.
B)1.00.
C)1.60.
D)2.50.
E)10.

Name: Use the figure below to answer the following question. Figure 27.3.2 -In Figure 27.3.2, the multiplier is A)0.25. B)1.00. C)1.60. D)2.50. E)10.
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Question

Use the figure below to answer the following question.
  
Figure 27.3.2
-In Figure 27.3.2, the multiplier is
A)0.25. 
B)1.00. 
C)1.60. 
D)2.50. 
E)10.

Quizplus · Accepted Answer

The multiplier is calculated as 1/(1-MPC), where MPC is the marginal propensity to consume. A multiplier of 2.50 suggests an MPC of 0.60, which is a common value used in economic models.

Use the Figure Below to Answer the Following Question