Answer to Question #332890 in Microeconomics for Unknown

Question #332890

Given a consumption function C=1 000+0,4Y with a proportional income tax rate of 40%, what is the multiplier? Round off your answer to two digits after the decimal.

O d. 2,78

O c. 2,50

O b. 1,70

a. 1,32

Expert's answer

"k=\\frac 1{1-MPC}=\\frac 1{MPS}=1.70."

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