When the the marginal propensity to consume (mpc) is 0.8, the simple spending multiplier is 5.
It should be noted that MPC simply means the measure of degrees to which the consumer will spend or save in relation to the raise in pay.
Therefore, when the the marginal propensity to consume (mpc) is 0.8, the simple spending multiplier will be:
= 1/(1 - 0.8)
= 1/0.2
= 5
Therefore, when the the marginal propensity to consume (mpc) is 0.8, the simple spending multiplier is 5.
Learn more about MPC on:
brainly.com/question/14310761
#SPJ4
