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      Question

      For which of the following consumption function the

      value of the income multiplier K = 4?
      A C= 100 + 0.5Y Correct Answer Incorrect Answer
      B C = 50 + 0.8Y Correct Answer Incorrect Answer
      C C= 200 + 0.75Y Correct Answer Incorrect Answer
      D C = 50 + 0.4Y Correct Answer Incorrect Answer
      E C = 120 + 1/4Y Correct Answer Incorrect Answer

      Solution

      C= 200 + 0.75Y MPC = 0.75, so multiplier = 1/(1-MPC) = 4

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