Question

In a closed economy with no taxes,
if the marginal propensity to consume
is always 0.90, then the value of the
multiplier be:
1)10
2)0.90
3)1.0
4)0.10​

Answer 1

Answer:

10

Explanation:

The formula for the simple multiplier is 1/(1-MPC)

Hence by putting the values we can find the answer