In a simplified economy without government or foreign trade, what is the formula used to calculate the multiplier?

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1 divided by the marginal propensity to save (MPS)1 divided by the sum of 1 and the marginal propensity to consume (MPC)One minus the marginal propensity to consume (MPC)1 divided by the marginal propensity to consume (MPC)None of the above

Explanation

The multiplier in a basic economy without government or foreign sectors is calculated as the reciprocal of the marginal propensity to save (MPS). This is because the multiplier effect depends on how much of additional income is saved rather than spent.