Multiplier Q (1 Viewer)

[copynpaste]

Hi, can't seem to get the answer for this q:

C = 2000 + 0.75Y
I = 3000

so Y = 20000

I have to find the simple multiplier, and I know the answer's meant to be 4... how do you do it?

 

[BLIT2014]

Simple multiplier formula is 1/1-MPC

....

Multiplier =1/1-0.75
=0.25

http://www.economicsonline.co.uk/Managing_the_economy/The_multiplier_effect.html

 

[copynpaste]

Simple multiplier formula is 1/1-MPC

....

Multiplier =1/1-0.75
=0.25

http://www.economicsonline.co.uk/Managing_the_economy/The_multiplier_effect.html

Why is MPC equal to 0.75?

cos isn't C = 2000 + 0.75(20000) = 17000

so MPC = 17000/20000 = 0.85? idk...

 

[faker]

C=2000+0.75Y
MPC = the change in consumption/the change in income correct ?
therefore when Y(income) is increased by $1, consumption increased by $0.75 thus, MPC=0.75
Therefore since k=1/(1-MPC)
k=1/(0.25)
therefore k=4