Based on the condition and calculations, what is your conclusion on the marginal propensity to consumer (MPC) in ROW 4? Change inGovernment.Spending$100SpendingMultiplier|Change inIncomeMPC$500|-$2500.8|-$100$200$8000.62.50.52$400|0.21.25$1000 1The formula for spending multiplier isMPSMPC+ MPS = 1MPS=1 – MPC1Spending multiplier=1_0,210.8=1. 25The change in government spending can becalculated using the change in income formula× AG1which is AY1-MPC1AY:× AG1-MPC1$1000=× AG1-0.21$1000=0.8× AG$1000 x 0. 8=AG$800=AG

Given: Row 4: MPC=0.2 Spending multplier=1.25 Change in government spending=$800 Change in…

Answered: Based on the condition and…

Business

Economics

Based on the condition and calculations, what is your conclusion on the marginal propensity to consumer (MPC) in ROW 4?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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