In a closed economy with no taxes if the marginal propensity to consume is always 0 middot 90 then t...........

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In a closed economy with no taxes, if the marginal propensity to consume is always 0·90, then the value of the multiplier will be

This questions was previously asked in

CAPF 2019 Paper-1

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10·00

1·00

0·90

0·10

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Explanation:

The multiplier effect is referred to as the injection of extra income and then more spending, and it will create more income. The effect refers to an increase in any final income cause by injection of any new spending. To calculate multiplier for Marginal propensity to consume: Multiplier = 1 / 1 – MPC = 1 / 1 – 0.9 = 1 / 0.1 www.gradeup.co 20 = 10