External trade and other economic activities of  X Y Z  economy was at equilibrium when both MPC and APC were 5/12 in the year 2023. And the actual level of consumption was 2 billion Naira. 

(A). Determine the value of the multiplier in the economy.

To determine the value of the multiplier in the economy, we can use the following formula:

\[
\text{Multiplier} = \frac{1}{1 - MPC}
\]

where MPC is the Marginal Propensity to Consume.

Given that \( MPC = \frac{5}{12} \), we can substitute this value into the formula:

\[
\text{Multiplier} = \frac{1}{1 - \frac{5}{12}} = \frac{1}{\frac{7}{12}} = \frac{12}{7} \approx 1.7143
\]

Thus, the value of the multiplier in the economy is approximately **1.71**.

If you have any questions or would like further details, let me know! Here are some related questions to consider:

1. What are the implications of a higher multiplier on the economy?
2. How does the average propensity to consume (APC) relate to the multiplier?
3. What factors could affect the MPC and APC in an economy?
4. How does the multiplier effect influence fiscal policy decisions?
5. Can the multiplier vary between different sectors of the economy?

**Tip:** Understanding the concepts of MPC and APC can provide insights into consumer behavior and overall economic stability.

External trade and other economic activities of X Y Z economy was at equilibrium when both MPC and APC were 5/12 in the year 2023. And the actual level of consumption was 2 billion Naira. (A). Determine the value of the multiplier in the economy.

Explore how to calculate the multiplier in an economy with a marginal propensity to consume (MPC) of 5/12. This detailed explanation includes the application of the multiplier formula and its implications for economic stability. Ideal for high school students studying economics.

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