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If the marginal propensity to consume is 0.40 , what is the multiplier, assuming there are no taxes or imports? Round to the tenths place.

Respuesta :

abiolataiwo2015

Based on the information given the multiplier, assuming there are no taxes or imports is 1.67.

Using this formula

Multiplier = 1 / ( 1 - MPC)

Where:

MPC=Marginal propensity=0.40

Let plug in the formula

Multiplier = 1 / ( 1 - 0.40)

Multiplier =1/.60

Multiplier = 1.666

Multiplier =1.67 (Approximately)

Inconclusion the multiplier, assuming there are no taxes or imports is 1.67.

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