The value of the multiplier is equal to the inverse of the marginal leakage rate.

Name: The value of the multiplier is equal to the inverse of the marginal leakage rate.
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Question

Quizplus · Accepted Answer

The statement is true. The multiplier represents the amount by which an initial change in spending or investment is multiplied or amplified throughout the economy. The formula for the multiplier is 1/(1 - marginal leakage rate). Therefore, the value of the multiplier is indeed equal to the inverse of the marginal leakage rate.

The Value of the Multiplier Is Equal to the Inverse