Assume that in a particular economy the MPC = 0.64 and the MPM = 0.14.
-Refer to the information above to answer this question.What is the value of the marginal leakage rate?
A)0.46.
B)0.50.
C)0.72.
D)0.86.

Question

Quizplus · Accepted Answer

The marginal leakage rate is calculated as 1 - (MPC + MPM) = 1 - (0.64 + 0.14) = 1 - 0.78 = 0.22. However, there seems to be a misunderstanding in the options provided as none of them match the calculated value. Based on the provided options and assuming a mistake in the calculation or interpretation, the conceptually closest approach to understanding marginal leakage (which includes savings, taxes, and imports - the latter represented by MPM here) would suggest looking for the portion not spent or invested domestically. Given the options and the common mistake of not including the correct calculation, an explanation based on the provided choices cannot accurately reflect the correct calculation from the given MPC and MPM. Please verify the calculation and the understanding of marginal leakage for accurate guidance.

Assume That in a Particular Economy the MPC = 0