If the multiplier is 4 and the investment function is: I=200. What is the value of the marginal propensity to consume?
Question
Solution 1
The marginal propensity to consume (MPC) can be calculated using the formula:
MPC = 1 - (1/Multiplier)
Given that the multiplier is 4, we can substitute this value into the formula:
MPC = 1 - (1/4) = 1 - 0.25 = 0.75
So, the value of the marginal propensity to consume is 0.75. Knowee AI StudyGPT is a powerful AI-powered study tool designed to help you to solve study problem. Knowee AI S
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