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Unilorin Post-UTME Economics 2024 (Model questions) Question 4

Question 4

National Income

When there is a change in national income as a result of changes in any if the components of national income, we refer to this as ________

  1. A.MPC
  2. B.MPs
  3. C.Multiplier
  4. D.Aggregate change
Show the answer and explanation

Answer: C (Multiplier)

Explanation

The multiplier measures how much national income changes when a component such as investment or consumption changes: K = 1/(1 − MPC) = 1/MPS.