If Em is 5, then marginal propensity to consume is, Em is the expenditure multiplierGroup of answer choices10.50.20.8
Question
If Em is 5, then marginal propensity to consume is, Em is the expenditure multiplierGroup of answer choices10.50.20.8
Solution
The Marginal Propensity to Consume (MPC) can be calculated using the formula:
MPC = 1/(1 - expenditure multiplier)
Given that the expenditure multiplier (Em) is 5, we can substitute this value into the formula:
MPC = 1/(1 - 5)
This simplifies to:
MPC = 1/(-4)
So, the MPC is -0.25. However, MPC is usually expressed as a positive value between 0 and 1, so it seems there may be a mistake in the given value of the expenditure multiplier. Please check the value of Em.
Similar Questions
If the marginal propensity to consume is 0.75, the multiplier for government purchases of goods and services will be:Choose one answer from the options below.0.751.3347.5
Suppose that a simple economy has a multiplier of 2. The investment function is I=40.What is the marginal propensity to consume?
Suppose John’s income increases from Rs.100 to Rs.200. At Rs.100, he saved Rs.10 and spent the remaining on the purchase of goods and services. At Rs.200, he consumes goods and services worth Rs. 160. What is his Marginal Propensity to consume
Suppose we know the multiplier of a country is 4. Assume that only consumption and investment spendings depend on the output level, the amount of taxation is exogenous, and the investment behaviour equation is known to be I = 2,000 + 0.1 Y. The marginal propensity to consume in this country is then __ Group of answer choices0.750.5uncertain from the information given0.65
Consider the following economy:(1) C = 1000 + 0.3 (Y - T)(2) I = 700(3) G = 500(4) T = 400What is the marginal propensity to consume?
Upgrade your grade with Knowee
Get personalized homework help. Review tough concepts in more detail, or go deeper into your topic by exploring other relevant questions.