{"id":3815,"date":"2024-03-05T15:56:26","date_gmt":"2024-03-05T15:56:26","guid":{"rendered":"https:\/\/exam.pscnotes.com\/mcq\/?p=3815"},"modified":"2024-03-05T15:56:26","modified_gmt":"2024-03-05T15:56:26","slug":"in-a-closed-economy-with-no-taxesif-the-marginal-propensity-to-consume-is-always-090-then-the-value-of-the-multiplier-will-be","status":"publish","type":"post","link":"https:\/\/exam.pscnotes.com\/mcq\/in-a-closed-economy-with-no-taxesif-the-marginal-propensity-to-consume-is-always-090-then-the-value-of-the-multiplier-will-be\/","title":{"rendered":"In a closed economy with no taxes,if the marginal propensity to consume is always 0:90, then the value of the multiplier will be"},"content":{"rendered":"<p>[amp_mcq option1=&#8221;10-00&#8243; option2=&#8221;1-00&#8243; option3=&#8221;0-90&#8243; option4=&#8221;0-10 &#8221; correct=&#8221;option1&#8243;]<!--more--><\/p>\n<p>The correct answer is (a) 10.00.<\/p>\n<p>The multiplier is a measure of the total change in income that results from an initial change in spending. It is calculated by dividing the change in income by the initial change in spending.<\/p>\n<p>In a closed economy with no taxes, the multiplier is equal to 1\/(1-MPC), where MPC is the marginal propensity to consume. The marginal propensity to consume is the fraction of an additional dollar of income that is spent on consumption.<\/p>\n<p>If the marginal propensity to consume is 0.90, then the multiplier is 1\/(1-0.90) = 10.00. This means that an initial increase in spending of $1 will lead to a total increase in income of $10.<\/p>\n<p>The other options are incorrect because they do not represent the correct value of the multiplier. Option (b), 1.00, is the value of the multiplier when the marginal propensity to consume is 1. Option (c), 0.90, is the value of the marginal propensity to consume. Option (d), 0.10, is the value of the multiplier when the marginal propensity to consume is 0.10.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>[amp_mcq option1=&#8221;10-00&#8243; option2=&#8221;1-00&#8243; option3=&#8221;0-90&#8243; option4=&#8221;0-10 &#8221; correct=&#8221;option1&#8243;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[169],"tags":[],"class_list":["post-3815","post","type-post","status-publish","format-standard","hentry","category-macroeconomics","no-featured-image-padding"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v22.2 (Yoast SEO v23.3) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>In a closed economy with no taxes,if the marginal propensity to consume is always 0:90, then the value of the multiplier will be<\/title>\n<meta name=\"description\" content=\"The multiplier is a measure of the total change in income that results from an initial change in spending. It is calculated by dividing the change in income by the initial change in spending.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/exam.pscnotes.com\/mcq\/in-a-closed-economy-with-no-taxesif-the-marginal-propensity-to-consume-is-always-090-then-the-value-of-the-multiplier-will-be\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"In a closed economy with no taxes,if the marginal propensity to consume is always 0:90, then the value of the multiplier will be\" \/>\n<meta property=\"og:description\" content=\"The multiplier is a measure of the total change in income that results from an initial change in spending. It is calculated by dividing the change in income by the initial change in spending.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/exam.pscnotes.com\/mcq\/in-a-closed-economy-with-no-taxesif-the-marginal-propensity-to-consume-is-always-090-then-the-value-of-the-multiplier-will-be\/\" \/>\n<meta property=\"og:site_name\" content=\"MCQ and Quiz for Exams\" \/>\n<meta property=\"article:published_time\" content=\"2024-03-05T15:56:26+00:00\" \/>\n<meta name=\"author\" content=\"rawan239\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"rawan239\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"1 minute\" \/>\n<!-- \/ Yoast SEO Premium plugin. -->","yoast_head_json":{"title":"In a closed economy with no taxes,if the marginal propensity to consume is always 0:90, then the value of the multiplier will be","description":"The multiplier is a measure of the total change in income that results from an initial change in spending. 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