Final answer:
The multiplier for an economy with a 50 percent Marginal Propensity to Consume (MPC) is 2, meaning that each dollar of initial spending generates $2 of new economic activity.
Step-by-step explanation:
If the Marginal Propensity to Consume (MPC) is 50 percent (0.5), the multiplier for this economy can be calculated using the formula 1/(1 - MPC). Since the MPC is 0.5, the marginal propensity to save (MPS) would be 1 - MPC, which equals 0.5 or 50 percent. Thus, the multiplier can be calculated as 1/(1 - 0.5) = 1/0.5 = 2. This implies that for every dollar initially injected into the economy, there is a total of $2 of new economic activity generated as a result of the consumption-spending cycle.
The multiplier effect in macroeconomics refers to the proportional amount of increase, or decrease, in final income that results from an injection, or withdrawal, of spending. For example, with an MPC of 80%, a $1 increase in autonomous expenditure could potentially result in a total increase in income of $5 (since the multiplier would be 1/(1 - 0.8) = 5).