1. If the MPC is .75, the government spending multiplier is Group of answer choices 2.5. 3 1.75 4 2. If the government spending multiplier is 4 and government purchases increase by $200 billion, output will increase by Group of answer choices $200 billion. $1,600 billion. $800 billion. $500 billion.

1. If the MPC is .75, the government spending multiplier is Group of answer choices 2.5. 3 1.75 4 2. If the government spending multiplier is 4 and government purchases increase by $200 billion, output will increase by Group of answer choices $200 billion. $1,600 billion. $800 billion. $500 billion.

ECON MACRO

5th Edition

ISBN:9781337000529

Author:William A. McEachern

Publisher:William A. McEachern

Chapter9: Aggregate Demand

Section: Chapter Questions

Problem 5.11P

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Question

1. If the MPC is .75, the government spending multiplier is

Group of answer choices

2.5.

1.75

2. If the government spending multiplier is 4 and government purchases increase by $200 billion, output will increase by

Group of answer choices

$200 billion.

$1,600 billion.

$800 billion.

$500 billion.

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C = 480 + 0.5YDI = 110T = 70G = 250 a. Calculate the private savings, public savings, and investment spending.b. Calculate the multiplier and explain how it affects equilibrium output.c. Suppose that the government decides to increase its spending from €250 billion to €300 billion. Find the equilibriumoutput, consumption, and disposable income. Why wouldthe government decide to expand fiscal spending?
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