Figure 3-7

-In Figure 3-7 above,the multiplier is
A)2.
B)0.2.
C)5.
D)2.5.

Question

Figure 3-7
 
-In Figure 3-7 above,the multiplier is
A)2. 
B)0.2. 
C)5. 
D)2.5.

Quizplus · Accepted Answer

The multiplier is calculated as 1/(1-MPC) or 1/MPS. If the MPC (marginal propensity to consume) or MPS (marginal propensity to save) is not directly given, it can be inferred from the context or the figure mentioned. Since the figure is not visible here, the most common approach to determining the multiplier is based on the formula 1/(1-MPC). Without specific details from the figure, the correct answer cannot be determined from the provided options. However, if we assume a typical scenario where the MPC is 0.8 (a common assumption in economic examples), the multiplier would be 1/(1-0.8) = 5, which corresponds to option C. This is a hypothetical explanation based on common economic principles, as the actual figure is not provided.

Figure 3-7 -In Figure 3-7 Above,the Multiplier Is