Lesson 2.4.4

2.4.4 The multiplier Quiz: Pearson Edexcel Economics, Unit 2

20 questions

Written by Revision Ninja · Last reviewed 11 October 2026

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Lesson 2.4.4, The multiplier: 20 multiple choice questions for the Pearson Edexcel Economics (9EC0), Unit 2: Theme 2: The UK economy – performance and policies, written with Revision Ninja.

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The 20 questions

  1. What is the formula used to calculate the multiplier ratio?

    • Withdrawals / Injections
    • Output change / Injection
    • Injection / Output change
    • MPC / MPS

  2. Which marginal propensity determines the size of secondary spending rounds in the multiplier?

    • MPM
    • MPC
    • MPT
    • MPS

  3. The marginal propensity to consume (MPC) is 0.75. The simple multiplier is:

    • 4
    • 0.75
    • 7.5
    • 1.33

  4. Which formula represents the total marginal propensity to withdraw in an open economy?

    • 1 - (MPS + MPT)
    • MPC + MPS + MPT
    • MPS - MPT - MPM
    • MPS + MPT + MPM

  5. With MPS = 0.1, MPT = 0.2 and MPM = 0.1, the multiplier is:

    • 0.4
    • 2.5
    • 10
    • 4

  6. If the MPC is 0.8 with no tax or imports, a rise in investment of 50 million raises national income by:

    • 40 million
    • 62.5 million
    • 250 million
    • 400 million

  7. How does an increase in the marginal propensity to import affect the multiplier?

    • Increases multiplier
    • No effect
    • Doubles multiplier
    • Reduces multiplier

  8. Which change would increase the value of the aggregate demand multiplier?

    • Higher saving rate
    • Higher tax rate
    • Higher import rate
    • Lower tax rate

  9. A government spending increase of 2 billion leads to a national income rise of 6 billion. What is the multiplier?

    • 3
    • 4
    • 2
    • 6

  10. Income rises by 300 million after a 60 million rise in exports. What is the multiplier?

    • 18
    • 0.2
    • 3
    • 5

  11. With an MPC of 0.6, a rise in AD of 40 billion will raise real national income by approximately:

    • 24 billion
    • 66.7 billion
    • 100 billion
    • 40 billion

  12. A country has an MPC of 0.9 and MPM of 0.2. Which is the approximate multiplier if MPT is zero?

    • 3.3
    • 1.1
    • 10
    • 5

  13. Why is the multiplier effect significant when government increases fiscal spending?

    • Stabilises price levels
    • Amplifies initial spending
    • Reduces total demand
    • Eliminates tax leakages

  14. What limits the real output effect of the multiplier when spare capacity is low?

    • Demand-pull inflation
    • Lower wage pressure
    • Falling import demand
    • Increased saving rates

  15. A government considers a 10 billion infrastructure programme. If the MPW is 0.4, what is the approximate increase in national income?

    • 4 billion
    • 25 billion
    • 100 billion
    • 40 billion

  16. If the marginal propensity to consume is 0.8, what is the simple multiplier value?

    • 4
    • 5
    • 0.2
    • 1.25

  17. What happens to the multiplier when the marginal propensity to consume rises?

    • It remains unchanged
    • It decreases
    • It becomes negative
    • It increases

  18. With MPS = 0.15, MPT = 0.25 and MPM = 0.10, the simple multiplier is:

    • 5
    • 2
    • 1.67
    • 0.5

  19. A rise in government spending of 5 billion, with a multiplier of 1.5, will raise national income by:

    • 5 billion
    • 10 billion
    • 7.5 billion
    • 3.3 billion

  20. What effect does a higher marginal rate of tax have on the multiplier?

    • Decreases it
    • Doubles it
    • Increases it
    • No effect

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