The accompanying table shows how consumers marginal propensities to consume in a particular economy are related to
Question:
a. Suppose the government engages in increased purchases of goods and services. For each of the income groups in the table, what is the value of the multiplier-that is, what is the "bang for the buck" from each dollar the government spends on government purchases of goods and services in each income group?
b. If the government needed to close a recessionary or inflationary gap, at which group should it primarily aim its fiscal policy of changes in government purchases of goods and services?
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Macroeconomics
ISBN: 978-1319120054
3rd Canadian edition
Authors: Paul Krugman, Robin Wells, Iris Au, Jack Parkinson
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