If the multiplier is 10 and income increases by $100, then saving will increase by
A) $90.
B) $9.
C) $10.
D) $100.

Name: If the multiplier is 10 and income increases by $100, then saving will increase by A) $90. B) $9. C) $10. D) $100.
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Question

Quizplus · Accepted Answer

The multiplier is the reciprocal of the marginal propensity to save (MPS). If the multiplier is 10, the MPS is 0.1, meaning 10% of the income increase is saved. Therefore, savings increase by $10.

If the Multiplier Is 10 and Income Increases by $100