Could someone explain how the multiplier concept works and e

Could someone explain how the multiplier concept works and easy way to find it quickly without much calculation? Thanks!

For questions 1-7, suppose that the economy is characterized by the following behavioral equations: C = 20 + 0.8 YD, I = 30, G = 70, T = 100, X = 0 (no exports), IM = 0 (no imports).

4. The multiplier of the economy is

A. .2.               B. .8.               C. 1.                D. 2.                E. 5.                 F. 10.

Solution

Multiplier = 1/(1 - MPC) = 1/(1 - 0.8) = 1/0.2 = 5

MPC is the change in consumption due to change in income.

C = 20 + 0.8Y

In the equation, coefficient of Y is the MPC.

Answer is E) 5

Could someone explain how the multiplier concept works and easy way to find it quickly without much calculation? Thanks! For questions 1-7, suppose that the eco

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