Given that the marginal propensity to cinsume is 0.8 and that the initial change in investment expenditure equals $100 million. (a). Calculate and explain the numeric value of the autonomous investment multiplier? (b). Calculate the resultant change in equilibrium national income?

Given that the marginal propensity to cinsume is 0.8 and that the initial change in investment expenditure equals $100 million. (a). Calculate and explain the numeric value of the autonomous investment multiplier? (b). Calculate the resultant change in equilibrium national income?

Economics For Today

10th Edition

ISBN:9781337613040

Author:Tucker

Publisher:Tucker

Chapter19: The Keynesian Model In Action

Section: Chapter Questions

Problem 8SQ

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Question

Given that the marginal propensity to cinsume is 0.8 and that the initial change in investment expenditure equals $100 million.

(a). Calculate and explain the numeric value of the autonomous investment multiplier?

(b). Calculate the resultant change in equilibrium national income?

Definition Definition Monetary value of all goods and services produced in an economy during a financial year. National income also refers to the total income earned by the factors of production during a financial year.

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