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Find multiplier if: (a) MPC=0.5 (b) 0.75% of increased income is consumed. |
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Answer» SOLUTION :`(a) K=(1)/(1-MPC)` `=(1)/(1-0.5)` `THEREFORE K=(1)/(0.5)=2` (b) `(b) K=(1)/(1-MPC)` `=(1)/(1-0.75)` `thereforeK=(1)/(1-0.25)=3` (MPC=0.75 as 75% of INCREASED income is spent on CONSUMPTION) |
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