Hi, is this correct and please help with question #1 below? Thank you!

(a)If the marginal propensity to save is 0.02, how large is the Keynesian multiplier?

Multiplier x=1/1-MPC, or x=1/MPS x=1/.02 = 50 = multiplier

(b)If the marginal propensity to save doubles to 0.10, what happens to the Keynesian multiplier? x=1/.10 = 10 = multiplier

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1.Using an MPC of 0.80, the impact of $100 spent the government will be as follows:

Spending Cycles Change in Spending Cumulative Increases in during Cycle Spending (billions per year) billions per year) $100 $100 2 80 180 64 244 51.2 295.2 40.9 336.1