What is the value of the multiplier when the marginal propensity to consume (MPC) equals 0.5?
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.
The multiplier is calculated as 1 divided by (1 minus MPC). When MPC is 0.5, the multiplier equals 1 / (1 - 0.5) = 2.