If the marginal propensity to consume (MPC) is 0.75, the simple multiplier is _____
A) 25.
B) 75.
C) 5.
D) ¾.
E) 4.

Name: If the marginal propensity to consume (MPC) is 0.75, the simple multiplier is _____ A) 25. B) 75. C) 5. D) ¾. E) 4.
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Question

Quizplus · Accepted Answer

The simple multiplier is calculated by dividing 1 by the marginal propensity to save (MPS). Since MPC + MPS = 1, MPS can be calculated as 1 - MPC = 1 - 0.75 = 0.25. Therefore, the simple multiplier is 1/0.25 = 4.

If the Marginal Propensity to Consume (MPC) Is 0