Suppose that an initial $10 billion increase in investment spending expands GDP by $10 billion in the
Question:
Suppose that an initial $10 billion increase in investment spending expands GDP by $10 billion in the first round of the multiplier process.
If GDP and consumption both rise by $6 billion in the second round of the process, what is the MPC in this economy? What is the size of the multiplier? If, instead, GDP and consumption both rose by $8 billion in the second round, what would have been the size of the multiplier?
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Macroeconomics
ISBN: 9780077337728
19th Edition
Authors: Campbell Mcconnell, Stanley Brue, Sean Flynn, Flynn Mcconnell Brue
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