Q5 · Practice questionSimple familiar1 mark
QUESTION 5
In a simple closed economy with no taxation, the marginal propensity to save is 0.20. The simple Keynesian multiplier is
(A)
5.
(B)
0.20.
(C)
0.80.
(D)
4.
WORKED SOLUTION
1 markAnswer A
Answer
A
Working
k = 1/MPS = 1/0.20 = 5. This result uses the stated simple model; taxes, imports and capacity constraints are excluded.
Marking criteria
- Select A. [1 mark]
Practice question aligned to the current QCAA syllabus; review the worked solution and marking criteria.
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