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Which one is correct?
K = 1MPC
K = 1MPS
K = 11−MPS
K = 11+MPS
- Option 1: K = 1MPC
- This suggests that the multiplier (K) is equal to the Marginal Propensity to Consume (MPC). However, it is incorrect in the context of economic multiplier formulas.
- Option 2: K = 1MPS
- This indicates the multiplier (K) is the reciprocal of the Marginal Propensity to Save (MPS), which is correct. The formula for the multiplier is usually K = 1/(1-MPC), and since 1-MPC = MPS, it simplifies to K = 1/MPS.
- Option 3: K = 11-MPS
- This could imply K is equal to a constant value 11 minus MPS, but it doesn't fit the formula used in economics.
- Option 4: K = 11+MPS
- Suggests K equals 11 plus MPS, which again is not typically relevant to calculating the multiplier.
By: santosh ProfileResourcesReport error
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