If the MPC is 0.6 and there are no imports or income taxes, the expenditure multiplier is
A) 0.4.
B) 0.6.
C) 2.5.
D) 6.
E) 1.7.

Name: If the MPC is 0.6 and there are no imports or income taxes, the expenditure multiplier is A) 0.4. B) 0.6. C) 2.5. D) 6. E) 1.7.
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Question

Quizplus · Accepted Answer

The expenditure multiplier is calculated as 1/(1-MPC), thus in this case, it will be 1/(1-0.6) = 2.5.

If the MPC Is 0