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If the marginal propensity to consume is 0.9, what is the multiplier?

A. 2.11
B. 1.11
C. 7
D. 10

Sagot :

GinnyAnsweridn
Certainly! To find the multiplier when given the marginal propensity to consume (MPC), you can use the following formula for the multiplier:

[tex]\[ \text{Multiplier} = \frac{1}{1 - \text{MPC}} \][/tex]

Here’s how you can solve it step-by-step:

1. The given marginal propensity to consume (MPC) is 0.9.

2. Substitute the value of MPC into the formula:

[tex]\[ \text{Multiplier} = \frac{1}{1 - 0.9} \][/tex]

3. Calculate the denominator:

[tex]\[ 1 - 0.9 = 0.1 \][/tex]

4. Divide 1 by the result of the denominator:

[tex]\[ \frac{1}{0.1} = 10 \][/tex]

So, the multiplier is 10.

Therefore, the correct answer is:
D. 10
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