Question

In what way multiplier is related to MPS

directly related to

equal to

not related to

reciprocal of​

Answer 1

Answer:1+1+1++1+11++1+1+1+1+1+1+1

Answer 2

Answer:

The multiplier effect is the magnified increase in equilibrium GDP that occurs when any component of aggregate expenditures changes. The greater the MPC (the smaller the MPS), the greater the multiplier.

MPS = 0, multiplier = infinity; MPS = .4, multiplier = 2.5; MPS = .6, multiplier = 1.67; MPS = 1, multiplier = 1.

MPC = 1; multiplier = infinity; MPC = .9, multiplier = 10; MPC = .67; multiplier = 3; MPC = .5, multiplier = 2; MPC = 0, multiplier = 1.

MPC = .8: Change in GDP = $40 billion (= $8 billion [!]multiplier of 5); MPC = .67: Change in GDP = $24 billion ($8 billion [!]multiplier of 3). The simple multiplier takes account of only the leakage of saving. The complex multiplier also takes account of leakages of taxes and imports, making the complex multiplier less than the simple multiplier.