Business, 25.02.2020 05:27, UaRemomGAY

Suppose that an initial $ 10 billion increase in investment spending expands GDP by $ 10 billion in the first round of the multiplier process. Also suppose that GDP and consumption both rise by $ 6 billion in the second round of the process.

Instructions: In parts a and b, round your answers to 1 decimal place. In part c enter your answer as a whole number.

A) What is the MPC in this economy?

B) What is the size of the multiplier?

C) If, instead, GDP and consumption both rose by $ 8 billion in the second round, what would have been the size of the multiplier?

Answers: 1

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Suppose that an initial $ 10 billion increase in investment spending expands GDP by $ 10 billion in...