The investment expenditure of an economy changes by N2 million and MPC is 0.75
The multiplier is
a
8
b
4
c
3
d
2
Explanation
Correct Option
bVideo Explanation
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Discussions (4)
SirClassic
3 years ago
Marginal Propensity to Consume (MPC) = 0.75
Thus, the multiplier (k) is:
k= 1÷(1-MPC)
= 1÷(1-0.75)
= 1 ÷ 0.25
= 4
NB: The formula for the multiplier (k) is;
k = 1÷(1-MPC) or 1÷MPS.
Since MPC was provided in the question, then "1÷(MPC)" is applicable.
14-05-23; 05:05pm
imoleoluwa123
5 years ago
the workings is not correct. 1-0.75= 0.25.
and how did you get another 1 which you minus from 0.25. meanwhile 1-0.25 can not even give us 4.
