Question

Under what circumstances can there be no multiplier and complete crowding out.

Answer 1

When MPC=0,then multiplier Equal to zero and there won't be any multiplier effect. Then income Equal to Autonomous spending .

And supply curve of loanable funds will be vertical ( saving curve) , showing supply of loanable funds will be constant.

So Increase in government spending will result in Decrease in national saving,which lead to increase in interest rate and domestic Investment will decrease an equal amount of government spending Increase.and complete crowding out.