question_answer

If MPC = 1, the value of multiplier is: (Choose the correct alternative)

(a) 0                                         (b) 1

(c) Between 0 and 1                 (d) Infinity

Answer:

The value of multiplier is \[\frac{1}{1-MPC}\] Here- MPC refers to the Marginal propensity to consume.

As we are given the value of MPC as 1. Thus, the value of multiplier becomes infinity.

Hence, the correct answer is option (d).