This economics question tests your understanding of economic models and analysis. The step-by-step answer below applies the relevant framework and explains the reasoning.
ScanSolve AI Answer
1. If the marginal propensity to consume (MPC) is 0.75, the value of the multiplier is: Step 1: Recall the formula for the multiplier (k). The multiplier is calculated using the marginal propensity to consume (MPC) with the formula: k = (1)/(1 - MPC) Step 2: Substitute the given MPC value into the formula. Given MPC = 0.75. k &= (1)/(1 - 0.75) \\ &= (1)/(0.25) \\ &= 4 The value of the multiplier is 4. Step 3: Select the correct option. Comparing the calculated value with the given options: A. 2 B. 4 C. 1.33 D. 0.25 The calculated value matches option B. B. 4 Last free one today — make it count tomorrow, or type /upgrade for unlimited.