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    Question

    For which of the following consumption functions, the value of income multiplier, k=4?

    A C = 100 + 0.5Y Correct Answer Incorrect Answer
    B C = 100 + 0.8Y Correct Answer Incorrect Answer
    C C = 50 + 0.75Y Correct Answer Incorrect Answer
    D C = 100 + 0.9Y Correct Answer Incorrect Answer
    E None of the above Correct Answer Incorrect Answer

    Solution

    Multiplier = 1/(1-MPC) = 1/(1-0.75) = 4

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