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Suppose an economy's marginal propensity to consume (MPC) is 0.6. Then 1 + MPC + MPC2 + MPC3 = 2.176 and, if we continued adding up terms in this geometric series, we would get closer and closer to the multiplier value of

Respuesta :

If we continued adding up terms in this geometric series, we would get closer and closer to the multiplier value of 2.5.

What do you mean by marginal propensity?

The marginal propensity to consume plus the marginal propensity to save equals 1.

Solution:

Multiplier=1/(1-MPC)

Multiplier=1/(1-0.6)

Multiplier=2.5

MPC of n the number of cycle:

=1 + MPC + MPC2 + MPC3

=1+0.6+0.6^2+0.6^3=2.176

Learn more about marginal propensity, refer to the link:

https://brainly.com/question/19089833

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