As the MPC gets close to 1,the value of the multiplier approaches
A)0.
B)1.
C)infinity.
D)None of the above is correct.

Question

Quizplus · Accepted Answer

The multiplier is the ratio of the change in equilibrium output to the change in autonomous expenditure. It is calculated as 1/(1-MPC). As MPC approaches 1, the denominator of the multiplier approaches 0. Therefore, the value of the multiplier approaches infinity as MPC approaches 1.

As the MPC Gets Close to 1,the Value of the Multiplier