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Thread: 2010 MC question

  1. #1
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    2010 MC question

    question 12
    The table shows selected data for a hypothetical economy.

    Year C S I
    1 100 50 400
    2 200 150 400
    3 300 250 400

    What is the value of the multiplier? The answer is 2.0
    I got 1 for some reason.

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    Re: 2010 MC question

    What did you use to get 1?

    Kinda odd question, not in the textbook :S
    Taking a guess here:
    But; change in consumption = change in savings from the table
    So MPS = 0.5?
    k = 1/MPS = 2
    I just made up that on the spot by fiddling with the numbers
    Hope its right :S

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    Re: 2010 MC question

    Quote Originally Posted by esraa View Post
    question 12
    The table shows selected data for a hypothetical economy.

    Year C S I
    1 100 50 400
    2 200 150 400
    3 300 250 400

    What is the value of the multiplier? The answer is 2.0
    I got 1 for some reason.
    Yeah basically what the above person said but I think you could have expressed it a bit better so you don't confuse the OP. He means the change in consumption and change in savings in this question are the same. OP if you meant that then awkward for me :/ HAHA okies (:
    Last edited by mangoz; 5 Aug 2011 at 2:57 PM.

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    Re: 2010 MC question

    LOL cant remember i think i did:

    Y= C + I
    then i found the change in C divided by the change in Y to find MPC, then 1-MPC = MPS and then 1/MPS=k and i ended up with 1

    but your way seems right if you got 2.. i never knew change in C= change in S :S

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    Re: 2010 MC question

    Just to clarify for those who search this question up:

    The key to this question is that △Y = △C + △S.

    To illustrate how we get there:
    We know that MPS = △S/△Y, and MPC = △C/△Y and that MPS + MPC = 1.

    Combining these two things, that means that △C/△Y + △S/△Y = 1, and if we multiply both sides by △Y, we get:
    △Y = △C + △S

    Relating it to this question.
    △Y = 100 + 100 = 200

    From there we calculate MPC and multiplier
    MPC = △C/△Y = 100/200 = 0.5

    k = 1/(1-MPC) = 1/0.5 = 2

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