When the MPC is 0.8 and t is 0.4, then the government spending multiplier is about -1.54.

Name: When the MPC is 0.8 and t is 0.4, then the government spending multiplier is about -1.54.
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Quizplus · Accepted Answer

The government spending multiplier is calculated as 1/(1 - MPC*(1-t)). With MPC = 0.8 and t = 0.4, the multiplier is 1/(1 - 0.8*(1-0.4)) = 1/(1 - 0.8*0.6) = 1/(1 - 0.48) = 1/0.52 = approximately 1.92, not -1.54.

When the MPC Is 0