If the MPC Is 3/5 Then the Multiplier Is

Multiple Choice

If the MPC is 3/5 then the multiplier is

A) 4, so a $100 increase in government spending increases aggregate demand by $400.
B) 1.5, so a $100 increase in government spending increases output by $150.
C) 2.5, so a $100 increase in government spending increases aggregate demand by $250.
D) 1.67, so a $100 increase in government spending increases output by $166.67.