Consider a simple macro model with a constant price level and demand-determined output.If the marginal propensity to spend is 0.9,the simple multiplier is
A)0.1.
B)0.9.
C)1.0.
D)1.1.
E)10.0.

Name: Consider a simple macro model with a constant price level and demand-determined output.If the marginal propensity to spend is 0.9,the simple multiplier is A)0.1. B)0.9. C)1.0. D)1.1. E)10.0.
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Question

Quizplus · Accepted Answer

The simple multiplier is calculated as 1/(1 - marginal propensity to spend), which in this case is 1/(1 - 0.9) = 10.

Consider a Simple Macro Model with a Constant Price Level