Refer to the information below. The multiplier in this economy is:
A) 4.
B) 5.
C) 1.5.
D) 3.

Name: Refer to the information below. The multiplier in this economy is: A) 4. B) 5. C) 1.5. D) 3.
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Question

Refer to the information below. The multiplier in this economy is: 
A) 4. 
B) 5. 
C) 1.5. 
D) 3.

Quizplus · Accepted Answer

The multiplier in an economy is calculated as 1/(1-MPC), where MPC is the marginal propensity to consume. In the given information, it is given that the marginal propensity to consume is 0.67. Therefore, the multiplier will be 1/(1-0.67) = 3. So, the best choice is D.

Refer to the Information Below