2.4 National income

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Question 23

An economy is operating with a marginal propensity to save ( $M P S$ ) of 0.08, a marginal propensity to tax ( $M P T$ ) of 0.10, and a marginal propensity to import ( $M P M$ ) of 0.07. The government subsequently reduces the basic rate of income tax, causing the $MPT\,$ to fall to 0.08. Simultaneously, a rise in consumer confidence causes the $MPS\,$ to fall to 0.05, while the $MPM\,$ remains unchanged.

What is the resulting change in the value of the national income multiplier?

An increase of $1.0$

An increase of $0.05$

A decrease of $1.0$

A decrease of $0.05$

2.4 National income Questions

A Level
Economics
2.4 National income

A Level
Economics Edexcel A
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