{"id":90379,"date":"2025-06-01T10:27:23","date_gmt":"2025-06-01T10:27:23","guid":{"rendered":"https:\/\/exam.pscnotes.com\/mcq\/?p=90379"},"modified":"2025-06-01T10:27:23","modified_gmt":"2025-06-01T10:27:23","slug":"in-a-closed-economy-with-no-taxes-if-the-marginal-propensity-to-consu","status":"publish","type":"post","link":"https:\/\/exam.pscnotes.com\/mcq\/in-a-closed-economy-with-no-taxes-if-the-marginal-propensity-to-consu\/","title":{"rendered":"In a closed economy with no taxes, if the marginal propensity to consu"},"content":{"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<\/p>\n

[amp_mcq option1=”10.00″ option2=”1.00″ option3=”0.90″ option4=”0.10″ correct=”option1″]<\/p>\n

\n
\n
This question was previously asked in<\/div>\n
UPSC CAPF – 2019<\/div>\n<\/div>\n
Download PDF<\/a>Attempt Online<\/a><\/div>\n<\/div>\n
The correct answer is A, 10.00.<\/section>\n
In a simple Keynesian model with a closed economy and no government (no taxes or government spending), the expenditure multiplier (k) is given by the formula k = 1 \/ (1 – MPC), where MPC is the marginal propensity to consume.<\/section>\n
Given that the marginal propensity to consume (MPC) is 0.90, the multiplier is calculated as k = 1 \/ (1 – 0.90) = 1 \/ 0.10 = 10. This means that a initial change in autonomous spending will lead to a tenfold larger change in equilibrium income.<\/section>\n","protected":false},"excerpt":{"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 [amp_mcq option1=”10.00″ option2=”1.00″ option3=”0.90″ option4=”0.10″ correct=”option1″] This question was previously asked in UPSC CAPF – 2019 Download PDFAttempt Online The correct answer is A, 10.00. In a simple Keynesian model with … <\/p>\n

Detailed SolutionIn a closed economy with no taxes, if the marginal propensity to consu<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1085],"tags":[1119,1120,1174],"class_list":["post-90379","post","type-post","status-publish","format-standard","hentry","category-upsc-capf","tag-1119","tag-economic-development","tag-national-income-gross-domestic-product","no-featured-image-padding"],"yoast_head":"\nIn a closed economy with no taxes, if the marginal propensity to consu<\/title>\n<meta name=\"description\" content=\"The correct answer is A, 10.00. 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In a simple Keynesian model with a closed economy and no government (no taxes or government spending), the expenditure multiplier (k) is given by the formula k = 1 \/ (1 - MPC), where MPC is the marginal propensity to consume.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/exam.pscnotes.com\/mcq\/in-a-closed-economy-with-no-taxes-if-the-marginal-propensity-to-consu\/\" \/>\n<meta property=\"og:site_name\" content=\"MCQ and Quiz for Exams\" \/>\n<meta property=\"article:published_time\" content=\"2025-06-01T10:27:23+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 consu","description":"The correct answer is A, 10.00. 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