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2.4.4 The multiplier

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Question 16

In 2023, the Treasury of the United Kingdom estimated the marginal propensity to consume (MPC) of households to be 0.875. In the Autumn Statement, the Chancellor announced an additional £14.5 billion capital investment funding package aimed at expanding the national fiber-optic broadband network.

Calculate the total increase in national income resulting from this £14.5 billion investment, assuming no other leakages.

[3]

2.4.4 The multiplier Questions

  1. A Level
  2. /Economics
  3. /2.4.4 The multiplier