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
jamb 2012economics

The correct answer is B. 4

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

Previous question Next question