-Refer to Exhibit 10-8.The multiplier is
A) 0.20.
B) 4.
C) 20.
D) 5.
E) 0.80.

Name: -Refer to Exhibit 10-8.The multiplier is A) 0.20. B) 4. C) 20. D) 5. E) 0.80.
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Question

-Refer to Exhibit 10-8.The multiplier is
A) 0.20. 
B) 4. 
C) 20. 
D) 5. 
E) 0.80.

Quizplus · Accepted Answer

The multiplier is calculated as 1/(1-MPC), where MPC is the marginal propensity to consume. If the multiplier is 5, it implies that the MPC is 0.8, since 1/(1-0.8) = 5.

-Refer to Exhibit 10-8.The Multiplier Is