If the MPC is .5,the multiplier is

A) .5.
B) 1.
C) 2.
D) 4.
E) 5.

MPC

Marginal Propensity to Consume, the fraction of additional income that is spent on consumption.

Multiplier

In economics, it refers to the factor by which gains in total output are greater than the change in spending that caused it, often associated with fiscal and monetary policy impacts.

Acquire knowledge about the key importance of the multiplier effect in the realm of fiscal policy.

Verified Answer

Sabria ThompsonMay 12, 2024

Final Answer :

Explanation :

The multiplier is calculated as 1/MPC, so in this case, 1/.5 = 2. Therefore, the correct answer is C.

Learning Objectives

Acquire knowledge about the key importance of the multiplier effect in the realm of fiscal policy.

If the MPC is .5,the multiplier is

A) .5.
B) 1.
C) 2.
D) 4.
E) 5.

Definitions

Learning Objectives

Learning Objectives

Related questions

If the MPC is .5,the multiplier isA) .5.B) 1.C) 2.D) 4.E) 5.

Definitions

Learning Objectives

Learning Objectives

Related questions

If the MPC is .5,the multiplier is

A) .5.
B) 1.
C) 2.
D) 4.
E) 5.