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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]
