Question

What is multiplier? How is it related with MPC? Explain with example.l​

Answer 1

Answer:

The fiscal multiplier is the ratio of a country's additional national income to the initial boost in spending or reduction in taxes that led to that extra income. For example, say that a national government enacts a $1 billion fiscal stimulus and that its consumers' marginal propensity to consume (MPC) is 0.75.

Answer 2

The fiscal multiplier is the ratio of a country's additional national income to the initial boost in spending or reduction in taxes that led to that extra income. For example, say that a national government enacts a $1 billion fiscal stimulus and that its consumers' marginal propensity to consume (MPC) is 0.75.

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