If the marginal propensity to save is 0.2,the multiplier will be 5.

Name: If the marginal propensity to save is 0.2,the multiplier will be 5.
Brand: Quizplus
Rating: 4.9 (55 reviews)

Question

Quizplus · Accepted Answer

The formula for the multiplier is 1/(1-MPC), where MPC is the marginal propensity to consume. Since the marginal propensity to save is 0.2, we can calculate the MPC as 1-0.2=0.8. Therefore, the multiplier will be 1/(1-0.8) = 5.

If the Marginal Propensity to Save Is 0