Question

If the government spending multiplier is found to be 1, what is the marginal propensity to consume?

• A. 0
• B. 0.2
• C. 0.5
• D. 1

Answer 1

The correct option is A

0

When $c=0,\frac{1}{(1-c)}=1$. The marginal propensity to consume in this case is zero. However, this is not a possibility in reality.