4. The country of Merryville has an unemployment rate that is greater than the natural rate of unemployment.The government of Merryville increases spending on goods and services by $200 billion, which is financed by borrowing. If the marginal propensity to consume in Merryville is 0.75: i. Calculate the multiplier ii. What is the maximum possible change in real gross domestic product (GDP) that could result from the $200 billion increase in government spending?
4. The country of Merryville has an unemployment rate that is greater than the natural rate of unemployment.The government of Merryville increases spending on goods and services by $200 billion, which is financed by borrowing. If the marginal propensity to consume in Merryville is 0.75: i. Calculate the multiplier ii. What is the maximum possible change in real gross domestic product (GDP) that could result from the $200 billion increase in government spending?
Chapter1: Making Economics Decisions
Section: Chapter Questions
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4. The country of Merryville has an
i. Calculate the multiplier
ii. What is the maximum possible change in real
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