If the marginal propensity to consume is 3/4,the simple multiplier is
A)3
B)7
C)4
D)25
E)3/10

Name: If the marginal propensity to consume is 3/4,the simple multiplier is A)3 B)7 C)4 D)25 E)3/10
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Question

Quizplus · Accepted Answer

The simple multiplier is calculated using the formula 1/ (1 - marginal propensity to consume).
Here, marginal propensity to consume is 3/4.
Therefore, the simple multiplier is 1/ (1-3/4) = 1 / (1/4) = 4.
Hence, the correct answer is (C) 4.

If the Marginal Propensity to Consume Is 3/4,the Simple Multiplier