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The spending multiplier, m, is 1/(1 MPC). a) If the MPC is 0.9. what is the spending multiplier? b) Now suppose government spending increases by $90 million. By how much will GDP rise? Smillion

The spending multiplier, m, is 1/(1 MPC). a) If the MPC is 0.9. what is the spending multiplier? b) Now suppose government spending increases by $90 million. By how much will GDP rise? Smillion

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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The spending multiplier m, is v/t MPC) arne MPC s09 what is the spending mutiplier? Now suppoe govemment spending inoees by $90 milon By how muh will GOP set million The spending multiplier, m, is 1/(1 MPC). a) If the MPC is 0.9. what is the spending multiplier? b) Now suppose government spending increases by $90 million. By how much will GDP rise? Smillion
Transcribed Image Text:The spending multiplier m, is v/t MPC) arne MPC s09 what is the spending mutiplier? Now suppoe govemment spending inoees by $90 milon By how muh will GOP set million The spending multiplier, m, is 1/(1 MPC). a) If the MPC is 0.9. what is the spending multiplier? b) Now suppose government spending increases by $90 million. By how much will GDP rise? Smillion
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