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allen rogers
on Nov 11, 2024

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If the simple spending multiplier is 8,the marginal propensity to consume is _____.

A) 1/8
B) 1/4
C) 4/5
D) 7/8
E) 8

Simple Spending Multiplier

The ratio of a change in real GDP demanded to the initial change in spending that brought it about; the numerical value of the simple spending multiplier is 1/(1 + MPC); called “simple” because only consumption varies with income.

Marginal Propensity

Describes the portion of additional income that an individual is willing to spend on consumption rather than saving.

  • Compute and elucidate the basic expenditure multiplier impact.
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Bhoomi BathejaNov 12, 2024
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