Answer:
a)) MPS 0.05 MPC 0.95
b)) MPS 0.10 MPC 0.90
c)) MPS 0.20 MPC 0.80
Explanation:
the goverment spending multiplier is calcualted as follow:
[tex]\frac{1}{1-MPC} =\frac{1}{MPS}[/tex]
if it is 20 then marignal propensivity to save:
1/20 = 0.05 and MPC will be 1 - MPS = 1 - 0.05 = 0.05
b) if 10 then 1/10 = MPS = 0.1 and 1-0.1 = 0.9 = MPC
if the multiplier is 5 then:
1 / 5 = 0.2 = MPS
and marginal propensivity to consume:
1 - 0.2 = 0.8
