The value of multiplier is: (choose the correct alternative) |
(a) \[\frac{1}{MPC}\] (b) \[\frac{1}{MPS}\] |
(c) \[\frac{1}{1-MPS}\] (d) \[\frac{1}{MPC-1}\] |
Answer:
The value of multiplier is \[\frac{1}{MPS}\left( or\frac{1}{1-MPC} \right).\] Here, MPS refers to the Marginal propensity to save. \[MPS=1MPC\]
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