Asked by
Demissie Jifara
on Dec 17, 2024
Verified
If the MPC = 4/5, then the government purchases multiplier is
A) 5/4.
B) 4/5.
C) 5.
D) 20.
MPC (Marginal Propensity to Consume)
The proportion of an increase in income that is spent on consumption rather than being saved.
Government Purchases Multiplier
The ratio of change in aggregate economic output to a change in government spending, used to analyze the effect of fiscal policy on the economy.
- Apprehend the essence of the multiplier effect and how it functions economically.
Verified Answer
CY
Learning Objectives
- Apprehend the essence of the multiplier effect and how it functions economically.