If investment increases by $0.5 trillion, calculate the change in equilibrium expenditure and the multiplier. In an
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If investment increases by $0.5 trillion, calculate the change in equilibrium expenditure and the multiplier.
In an economy with no exports and no imports, autonomous consumption is $1 trillion, the marginal propensity to consume is 0.8, investment is $5 trillion, and government expenditure on goods and services is $4 trillion. Taxes are $4 trillion and do not vary with real GDP.
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