calculate the multiplier for the following cases.\ncase\tmultiplier\nmps = 0.25\t4\nmpc = 5/6\t6\nmps =…
calculate the multiplier for the following cases.\ncase\tmultiplier\nmps = 0.25\t4\nmpc = 5/6\t6\nmps = 0.125\t□
Answer
Explanation:
Step1: Recall the multiplier formula
The multiplier formula is $k=\frac{1}{MPS}$, where $k$ is the multiplier and $MPS$ is the marginal - propensity to save.
Step2: Substitute the given $MPS$ value
Given $MPS = 0.125=\frac{1}{8}$, then $k=\frac{1}{\frac{1}{8}}$.
Step3: Calculate the multiplier
$k = 8$
Answer:
8