The investment expenditure of an economy changes by N2 million and MPC is 0.75 The
ECONOMICS
JAMB 2012
The investment expenditure of an economy changes by N2 million and MPC is 0.75 The multiplier is
- A. 8
- B. 4
- C. 3
- D. 2
Correct Answer: B. 4
Explanation
The Multiplier is calculated as ( 1 divided by 1 minus the MPC. That is; Multiplier = 1 ÷ (1 - 0.75) = 0.25 1 ÷ 0.25 = 4
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