Suppose a small economy has consumption spending of $6,500 when its income is $10,000. When income goes
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Suppose a small economy has consumption spending of $6,500 when its income is $10,000. When income goes up to $11,000 then consumption spending is $7,250. What is the government spending multiplier in this economy? (Hint: Find the MPC first, then calculate the multiplier.)
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