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What is the investment multiplier in terms of the MPC, c?
Ac / (1 - c)
B1 / c
C1 / (1 - c)
D1 - c
Answer & Solution
Correct answer: C. 1 / (1 - c)
The ratio of total change in output to initial autonomous change is 1 over (1 - c), which equals 1 over MPS.
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