Question : If the marginal propensity to consume is denoted by c, then the government expenditure multiplier can be expressed as _______.
Option 1: c
Option 2: 1/1-c
Option 3: 1/c
Option 4: -1/c
Correct Answer: 1/1-c
Solution : The correct answer is 1/1-c .
The additional consumer spending that results from a rise in national income is known as the marginal propensity to consume (MPC). It is the extra spending brought on by an extra dollar in revenue. The multiplier is calculated as 1/(1 minus MPC).
Related Questions
Know More about
Staff Selection Commission Combined Grad ...
Admit Card | Eligibility | Application | Selection Process | Preparation Tips | Result | Answer Key
Get Updates Brochure
Your Staff Selection Commission Combined Graduate Level Exam brochure has been successfully mailed to your registered email id “”.
