HSC M/C qn (1 Viewer)

[amberbambi]

Could someone please explain the reasoning/logic behind this question? This was from the 2010 HSC economics paper.

(question attached) Thank you.

 

[LoanWoolfq]

bump

 

[shashysha]

Here you should use the multiplier formula of k=1/MPS. Note that income (Y) can be given by Y=C+S. You can work out MPS by change in savings / change in income which should give MPS=0.5. The multiplier is 1/MPS = 1/0.5 which would equal 2 so it's D.