The answer is: 1/(1 - MPC).What is the question?
A) What is the marginal propensity to save?
B) What is the efficiency wage model?
C) What does consumption equal if the economy is in equilibrium?
D) What is the multiplier?
E) What does disposable income equal if the economy is in equilibrium?

Question

Quizplus · Accepted Answer

The formula 1/(1 - MPC) represents the multiplier in economics, which measures the effect of a change in investment, government spending, or other economic variables on the overall economy. MPC stands for marginal propensity to consume, and the multiplier effect explains how an initial change in spending leads to a larger change in overall economic output.

The Answer Is: 1/(1 - MPC)