What will be the value of multiplier when the ratio between MPS and MPC Is 1:4?
Answer & explanation
Correct answer: option 1
The correct answer is option 1: 5
\(\frac{MPS}{MPC}\) = \(\frac{1}{4}\)
MPC = 4 MPS
MPC + MPS = 1
4 MPS + MPS = 1
5MPS = 1
MPS = \(\frac{1}{5}\)
Multiplier = \(\frac{1}{MPS}\) = \(\frac{1}{\frac{1}{5}}\) = 5