If the multiplier is 4, the marginal propensity to consume (MPC)must be
A)0.25.
B)0.5.
C)0.75.
D)1.

Name: If the multiplier is 4, the marginal propensity to consume (MPC)must be A)0.25. B)0.5. C)0.75. D)1.
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Question

Quizplus · Accepted Answer

The formula for the multiplier is 1/(1-MPC), which means that if the multiplier is 4, then 1/(1-MPC) = 4. Solving for MPC we get MPC = 0.75. Therefore, the best choice is C, which corresponds to 0.75.

If the Multiplier Is 4, the Marginal Propensity to Consume