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Sagot :
0.2 is the value of the marginal propensity to save (mps). The multiplier's value would be 5.
Briefing:
Multiplier = 1 / marginal saving propensity (MPS)
= 1 / 0.2
= 5.
What does marginal propensity mean?
The percentage of an overall salary increase that a customer spends on purchasing goods and services rather than saving is known as the marginal propensity to consume (MPC) in economics.
How is marginal propensity determined?
By dividing the change in consumer spending (C) by the change in disposable income (I), the MPC formula is created. Formula for the marginal propensity to consume is (C1 - C0) / (I1 - I0), where C0 is the initial amount spent by consumers.
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