SarkariPYQ

SSC Stenographer 2024 PYQ — Question 134

SSC Stenographer - 11/12/2024 (9:00 AM to 11:00 AM) • General Awareness • Q134

Back to paper

If the MPC = 0.8, what is the likely value of the Government expenditure multiplier for a standard national output (aggregate demand) function Y = C + I + G ?

Show answer & explanation

Correct answer: A

Explanation

The correct answer is  option 1  i.e.  5 .

To find the Government Expenditure Multiplier, we use the formula:

Multiplier = 11−MPC\frac{1}{1 - MPC}

Given:

  • MPC (Marginal Propensity to Consume) = 0.8

Multiplier  = 11−0.8=10.2=5 \frac{1}{1 - 0.8} = \frac{1}{0.2} = 5