In: Economics
Using the appropriate formulas, compute the simple Keynesian multipliers if the MPC = 50%, the MPS = 20%, the MPC = 75%, and the MPS = 10%
Multiplier = 1/(1-MPC) = 1/MPS
A) if the MPC = 50%
MPC = 0.5
Multiplier = 1/(1-0.5) = 2
B) MPS = 20%
MPS = 0.2
Multiplier = 1/0.2 = 5
C) MPC = 75%
MPC = 0.75
Multiplier = 1/(1-0.75) = 4
D) MPS = 10%
Multiplier = 1/0.1 = 10