Multiple choice multiplier question (1 Viewer)

[hehe43]

Question 12, answer is D I just can't figure out why. It's from 2010 hsc.

 

[mmmmmmmmaaaaaaa]

Y = C + S
So for year 1 Y = 150, year 2 Y = 350 and year 3 Y = 550.

Going off this, we can now find MPC and MPS for year 1, 2 and 3 in order to find the value of the multiplier ... k = 1/mps or k=1/(1-mpc)

As you can see from the data, the change in consumption (C) and savings (S) is both 100, and the change in income (Y) is 200.

Therefore, k = 1/0/5
k=2, which gievs you D

 

[hehe43]

Y = C + S
So for year 1 Y = 150, year 2 Y = 350 and year 3 Y = 550.

Going off this, we can now find MPC and MPS for year 1, 2 and 3 in order to find the value of the multiplier ... k = 1/mps or k=1/(1-mpc)

As you can see from the data, the change in consumption (C) and savings (S) is both 100, and the change in income (Y) is 200.

Therefore, k = 1/0/5
k=2, which gievs you D

Then why do they give the third column where I=400 without change? Isn't I meant to represent income? Thanks for the explanation btw.

 

[mmmmmmmmaaaaaaa]

Then why do they give the third column where I=400 without change? Isn't I meant to represent income? Thanks for the explanation btw.

I = investment. Y = income. I think they might’ve just put it there to throw people off

 

[hehe43]

I = investment. Y = income. I think they might’ve just put it there to throw people off

Ah yh thx bruv I get mixed up