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Economics
Macro Economics: Determination of Income and Employment
What will be the value of multiplier when the ratio between MPS and MPC Is 1:4?
5
4
3
1
\(\frac{MPS}{MPC}\) = \(\frac{1}{4}\)
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