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Relationship

if:

MPC decreases, K (Multiplier) will be weaker

MPC increases, K will be stronger

MPC = o(zero), K = 1

MPC = 1, K= infinity

in real life:

K = more than 1 & less than infinity

MPC = less than 1 & more than 0

Assumptions:

K works better in a closed economy (no foreign trade)

K works better in an economy which has not reached full employment level

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14y ago

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Related Questions

The relationship between MPC and MPS is?

mps/mpc=1


If the MPC is point 5 the tax multiplier would be what?

Since MPC+MPS=1 Then MPS=1-0.5=0.5 Tax Multiplier= -(MPC/MPS)=-0.5/0.5= -1


How can one determine the tax multiplier for a given economic scenario?

To determine the tax multiplier for a given economic scenario, you can use the formula: Tax Multiplier -MPC / (1 - MPC), where MPC is the marginal propensity to consume. The MPC represents the portion of additional income that individuals spend on goods and services. By calculating the MPC and plugging it into the formula, you can find the tax multiplier, which shows how changes in taxes affect overall economic activity.


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What is the multiplier if MPC is 0.25?

1.33The answer is 1.33


What is the tax multiplier if MPC 0.75?

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How can you derive the tax rate multiplier?

Taxation Multiplier = - (MPC) / (1 - MPS) Where, MPC = marginal propensity to consume, and MPS = marginal propensity to save.


If the value of multiplier is 2.49 then find out.what is MPC and MPS?

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What is an example of a multiplier effect?

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If you know tax multiplier how do you figure government spending multiplier?

you could do it two ways .If you have the MPC could divide it


How do you derive multiplier?

The multiplier effect is derived from the marginal propensity to consume (MPC) and is calculated using the formula: Multiplier = 1 / (1 - MPC). This formula reflects how an initial change in spending (such as government investment) leads to a larger overall increase in economic activity as recipients of the initial spending re-spend a portion of their income. The higher the MPC, the larger the multiplier, as more income is cycled back into the economy.