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. what is the MPC? 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?
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. what is the MPC? 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?
Chapter19: The Keynesian Model In Action
Section: Chapter Questions
Problem 7SQP
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Suppose that an initial $10 billion increase in investment spending expands
what is the MPC?
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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