Suppose that an economy has an income of $20,000 with a marginal propensity to consume of 0.5. What is the multiplier? Give your answer to two decimals.
Answer
the formula is:
Multiplier =1/(1-MPC)
marginal propensity to consume=MPC=0.5
Multiplier =1/(1-0.5)
=2
the multiplier is 2
Suppose that an economy has an income of $20,000 with a marginal propensity to consume of...
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