Multiple Choice
If the marginal propensity to consume is 0.85 and there are no imports or income taxes,the expenditure multiplier is equal to
A) 1 - 0.85 = 0.15.
B) 0.85 × the change in autonomous expenditure.
C) 1 ÷ (1 - 0.85) = 1 ÷ 0.15 = 1.45.
D) 1 ÷ 0.85 = 1.176.
E) 0.85 ÷ 1 = 0.85.
Correct Answer:
Verified
Correct Answer:
Verified
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