If the multiplier has a value of 1, then the value of the marginal propensity to save (MPS) is
A) 1.00.
B) 0.
C) 10.00.
D) 0.10.

Name: If the multiplier has a value of 1, then the value of the marginal propensity to save (MPS) is A) 1.00. B) 0. C) 10.00. D) 0.10.
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Question

Quizplus · Accepted Answer

The marginal propensity to save (MPS) is the complement of the marginal propensity to consume (MPC). If the multiplier, which is 1/(1-MPC), equals 1, it implies that 1-MPC = 1, making MPC = 0. Since MPS + MPC = 1, if MPC is 0, MPS must be 1.

If the Multiplier Has a Value of 1, Then the Value