ECONOMICS
AGGREGATE DEMAND
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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MPS = 0.1 MPT = 0.2 MPM = 0.2 what is the value of the multiplier?
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2
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3.333
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0.5
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0.3
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Explanation:
Detailed explanation-1: -Answer and Explanation: The formula for finding the tax multiplier is T M=MPCMPS T M = MPC MPS where MPC=1−MPS MPC = 1 − MPS . So, the tax multiplier is T M=1−0.20.2=4 T M = 1 − 0.2 0.2 = 4 .
Detailed explanation-2: -MPC – Marginal Propensity to Consume. MPS – Marginal Propensity to Save. MPT – Marginal Propensity to Tax. MPM – Marginal Propensity to Import.
Detailed explanation-3: -Determine the marginal propensity of consumption. Calculate the MPC to apply the multiplier formula. Subtract the MPC from one. Divide one by the difference. Evaluate the result. 29-Sept-2021
Detailed explanation-4: -The Spending Multiplier can be calculated from the MPC or the MPS. Multiplier = 1/1-MPC or 1/MPS
There is 1 question to complete.