If the slope of the AE curve is 0.80, the value of the multiplier is
A) 5.
B) 1.25.
C) 2.
D) indeterminate from the information given.

Name: If the slope of the AE curve is 0.80, the value of the multiplier is A) 5. B) 1.25. C) 2. D) indeterminate from the information given.
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Question

Quizplus · Accepted Answer

The multiplier is calculated as 1/(1-MPC), where MPC is the slope of the AE curve. If the slope is 0.80, the multiplier is 1/(1-0.80) = 1/0.20 = 5.

If the Slope of the AE Curve Is 0