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- Subject
- The National Economyeconomics-mcqs › the-national-economy
- Published
- 27 May 2019
- Last updated
- 28 May 2026
Explanation
The multiplier is calculated as 1 divided by (1 minus MPC). When MPC is 0.5, the multiplier equals 1 / (1 - 0.5) = 2.
More The National Economy MCQs
Practice related questions from the same subject.
- 1.How does leakage through imports in an open economy affect the multiplier's magnitude?
- 2.Which components determine the overall multiplier effect in an economy?
- 3.With fixed government expenditure and tax rates, during which economic phases does the government budget deficit increase and during which does it decrease?
- 4.What is the likely effect on economic output if the government raises taxes to fully cover an increase in its spending?
- 5.When households attempt to increase their savings, but equilibrium income shifts without any change in total savings, what economic concept does this illustrate?
- 6.How is the multiplier determined in economic terms?
- 7.If investment is considered autonomous, what factor primarily determines the slope of the aggregate demand (AD) curve?
- 8.In the short-run equilibrium, how does aggregate demand relate to the actual level of output?
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