Mathematics · Multiplier and Propensity to Save
Suppose the saving function is given by S = −5 + 0.3Y. Which of the following is correct regarding the Marginal Propensity to Consume (MPC) and the investment multiplier (k)?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1MPC = 0.7; investment multiplier = 7.00
- 2MPC = 0.5; investment multiplier = 2.00
- 3MPC = 0.3; investment multiplier = 1.43
- 4MPC = 0.7; investment multiplier = 3.33✓
Correct answer
MPC = 0.7; investment multiplier = 3.33
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