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Economics (MindTap Course List)

13th Edition
Roger A. Arnold
ISBN: 9781337617383

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BuyFindarrow_forward

Economics (MindTap Course List)

13th Edition
Roger A. Arnold
ISBN: 9781337617383
Textbook Problem

If the MPC is 0.70, what does the multiplier equal?

To determine

Multiplier value of the economy.

Explanation

Multiplier value shows us that how much times more impact will be on the economy due to a small change in the income or investment in the economy. The multiplier value is calculated with the help of the Marginal propensity to consume (MPC) by the people and the simple multiplier formula is as follows:

Multiplier value=11MPC

The multiplier value of the economy can be calculated by plugging the value of the MPC into the equation as follows:

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