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Calculate the value of the multiplier if the MPC = 1/2 or 0.5 and = 3/4. - Economics

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Question

Calculate the value of the multiplier if the MPC = `1/2` or 0.5 and = `3/4`.

Numerical
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Solution

The multiplier K is calculated as:

K = `1/(1-MPC)`

Therefore if MPC = `1/2` or 0.5;

K = `1/(1 - 1/2)`

= `1/(1-0.5)`

= `1/0.5`

= 2

If MPC = `3/4`,

K = `1/(1 - 3/4)`

= `1/(1-0.75)`

= `1/0.25`

= 4

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Chapter 20: Multiplier - I : Static and Dynamic - TEST QUESTIONS [Page 20.23]

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R. K. Lekhi and P. K. Dhar Economics [English] Class 12 ISC
Chapter 20 Multiplier - I : Static and Dynamic
TEST QUESTIONS | Q A. 10. | Page 20.23
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