If the marginal propensity to consume is 0.75, the multiplier is:
A)0.25.
B)4.
C)3.
D)1.33.

Name: If the marginal propensity to consume is 0.75, the multiplier is: A)0.25. B)4. C)3. D)1.33.
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Quizplus · Accepted Answer

The multiplier is equal to 1 divided by the marginal propensity to save. And since the marginal propensity to consume plus the marginal propensity to save equals 1, we know that the marginal propensity to save is 1 minus 0.75, which is 0.25. Thus, the multiplier is 1/0.25, which is 4.

If the Marginal Propensity to Consume Is 0