(a) What is the spending multiplier, when M P C = 0.90 and M P I = 0.10

Question

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Answer 1

Question

Chapter 10, Problem 4E

To determine

(a)

What is the spending multiplier, when MPC=0.90 and MPI=0.10

Expert Solution

Explanation of Solution

We have

MPC=0.90

MPI=0.10

Also, MPC+MPS=1

MPS=1−MPC

MPS=1−0.90

MPS=0.10

Thus, multiplier is calculated as

Multiplier = 1MPS+MPI

Multiplier = 10.10+0.10

Multiplier = 10.20

Multiplier = 102

Multiplier = 5

Hence, the value of multiplier is 5

Economics Concept Introduction

Concept Introduction:

Multiplier is defined as the ratio of change in equilibrium income with the initial change in autonomous expenditure

Multiplier = change in equilibrium income or real GDPChange in autonomous expenditure

Also, multiplier can be measured from the leakages

Multiplier = 1Leakages

Multiplier = 1MPS+MPI

Where MPS= Marginal Propensity to save

MPI= Marginal Propensity to invest

To determine

(b)

What is the spending multiplier, when MPC=0.90 and MPI=0.20

Expert Solution

Explanation of Solution

We have

MPC=0.90

MPI=0.20

Also, MPC+MPS=1

MPS=1−MPC

MPS=1−0.90

MPS=0.10

Thus, multiplier is calculated as

Multiplier = 1MPS+MPI

Multiplier = 10.10+0.20

Multiplier = 10.30

Multiplier = 103

Multiplier = 3.34

Hence, the value of multiplier is 3.34

Economics Concept Introduction

Concept Introduction:

Multiplier is defined as the ratio of change in equilibrium income with the initial change in autonomous expenditure

Multiplier = change in equilibrium income or real GDPChange in autonomous expenditure

Also, multiplier can be measured from the leakages

Multiplier = 1Leakages

Multiplier = 1MPS+MPI

Where MPS= Marginal Propensity to save

MPI= Marginal Propensity to invest

To determine

(c)

What is the spending multiplier, when MPC=0.80 and MPI=0.30

Expert Solution

Explanation of Solution

We have

MPC=0.80

MPI=0.30

Also, MPC+MPS=1

MPS=1−MPC

MPS=1−0.80

MPS=0.20

Thus, multiplier is calculated as

Multiplier = 1MPS+MPI

Multiplier = 10.20+0.30

Multiplier = 10.50

Multiplier = 105

Multiplier = 2

Hence, the value of multiplier is 2

Economics Concept Introduction

Concept Introduction:

Multiplier is defined as the ratio of change in equilibrium income with the initial change in autonomous expenditure

Multiplier = change in equilibrium income or real GDPChange in autonomous expenditure

Also, multiplier can be measured from the leakages

Multiplier = 1Leakages

Multiplier = 1MPS+MPI

Where MPS= Marginal Propensity to save

MPI= Marginal Propensity to invest

To determine

(d)

What is the spending multiplier, when MPC=0.90 and MPI=0

Expert Solution

Explanation of Solution

We have

MPC=0.90

MPI=0.10

Also, MPC+MPS=1

MPS=1−MPC

MPS=1−0.90

MPS=0.10

Thus, multiplier is calculated as

Multiplier = 1MPS+MPI

Multiplier = 10.10+0

Multiplier = 10.10

Multiplier = 101

Multiplier = 10

Hence, the value of multiplier is 10

Economics Concept Introduction

Concept Introduction:

Multiplier is defined as the ratio of change in equilibrium income with the initial change in autonomous expenditure

Multiplier = change in equilibrium income or real GDPChange in autonomous expenditure

Also, multiplier can be measured from the leakages

Multiplier = 1Leakages

Multiplier = 1MPS+MPI

Where MPS= Marginal Propensity to save

MPI= Marginal Propensity to invest

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Answer 2

Question

Chapter 10, Problem 4E

To determine

(a)

What is the spending multiplier, when MPC=0.90 and MPI=0.10

Expert Solution

Explanation of Solution

We have

MPC=0.90

MPI=0.10

Also, MPC+MPS=1

MPS=1−MPC

MPS=1−0.90

MPS=0.10

Thus, multiplier is calculated as

Multiplier = 1MPS+MPI

Multiplier = 10.10+0.10

Multiplier = 10.20

Multiplier = 102

Multiplier = 5

Hence, the value of multiplier is 5

Economics Concept Introduction

Concept Introduction:

Multiplier is defined as the ratio of change in equilibrium income with the initial change in autonomous expenditure

Multiplier = change in equilibrium income or real GDPChange in autonomous expenditure

Also, multiplier can be measured from the leakages

Multiplier = 1Leakages

Multiplier = 1MPS+MPI

Where MPS= Marginal Propensity to save

MPI= Marginal Propensity to invest

To determine

(b)

What is the spending multiplier, when MPC=0.90 and MPI=0.20

Expert Solution

Explanation of Solution

We have

MPC=0.90

MPI=0.20

Also, MPC+MPS=1

MPS=1−MPC

MPS=1−0.90

MPS=0.10

Thus, multiplier is calculated as

Multiplier = 1MPS+MPI

Multiplier = 10.10+0.20

Multiplier = 10.30

Multiplier = 103

Multiplier = 3.34

Hence, the value of multiplier is 3.34

Economics Concept Introduction

Concept Introduction:

Multiplier is defined as the ratio of change in equilibrium income with the initial change in autonomous expenditure

Multiplier = change in equilibrium income or real GDPChange in autonomous expenditure

Also, multiplier can be measured from the leakages

Multiplier = 1Leakages

Multiplier = 1MPS+MPI

Where MPS= Marginal Propensity to save

MPI= Marginal Propensity to invest

To determine

(c)

What is the spending multiplier, when MPC=0.80 and MPI=0.30

Expert Solution

Explanation of Solution

We have

MPC=0.80

MPI=0.30

Also, MPC+MPS=1

MPS=1−MPC

MPS=1−0.80

MPS=0.20

Thus, multiplier is calculated as

Multiplier = 1MPS+MPI

Multiplier = 10.20+0.30

Multiplier = 10.50

Multiplier = 105

Multiplier = 2

Hence, the value of multiplier is 2

Economics Concept Introduction

Concept Introduction:

Multiplier is defined as the ratio of change in equilibrium income with the initial change in autonomous expenditure

Multiplier = change in equilibrium income or real GDPChange in autonomous expenditure

Also, multiplier can be measured from the leakages

Multiplier = 1Leakages

Multiplier = 1MPS+MPI

Where MPS= Marginal Propensity to save

MPI= Marginal Propensity to invest

To determine

(d)

What is the spending multiplier, when MPC=0.90 and MPI=0

Expert Solution

Explanation of Solution

We have

MPC=0.90

MPI=0.10

Also, MPC+MPS=1

MPS=1−MPC

MPS=1−0.90

MPS=0.10

Thus, multiplier is calculated as

Multiplier = 1MPS+MPI

Multiplier = 10.10+0

Multiplier = 10.10

Multiplier = 101

Multiplier = 10

Hence, the value of multiplier is 10

Economics Concept Introduction

Concept Introduction:

Multiplier is defined as the ratio of change in equilibrium income with the initial change in autonomous expenditure

Multiplier = change in equilibrium income or real GDPChange in autonomous expenditure

Also, multiplier can be measured from the leakages

Multiplier = 1Leakages

Multiplier = 1MPS+MPI

Where MPS= Marginal Propensity to save

MPI= Marginal Propensity to invest

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Answer 3

Question

Chapter 10, Problem 4E

To determine

(a)

What is the spending multiplier, when MPC=0.90 and MPI=0.10

Expert Solution

Explanation of Solution

We have

MPC=0.90

MPI=0.10

Also, MPC+MPS=1

MPS=1−MPC

MPS=1−0.90

MPS=0.10

Thus, multiplier is calculated as

Multiplier = 1MPS+MPI

Multiplier = 10.10+0.10

Multiplier = 10.20

Multiplier = 102

Multiplier = 5

Hence, the value of multiplier is 5

Economics Concept Introduction

Concept Introduction:

Multiplier is defined as the ratio of change in equilibrium income with the initial change in autonomous expenditure

Multiplier = change in equilibrium income or real GDPChange in autonomous expenditure

Also, multiplier can be measured from the leakages

Multiplier = 1Leakages

Multiplier = 1MPS+MPI

Where MPS= Marginal Propensity to save

MPI= Marginal Propensity to invest

To determine

(b)

What is the spending multiplier, when MPC=0.90 and MPI=0.20

Expert Solution

Explanation of Solution

We have

MPC=0.90

MPI=0.20

Also, MPC+MPS=1

MPS=1−MPC

MPS=1−0.90

MPS=0.10

Thus, multiplier is calculated as

Multiplier = 1MPS+MPI

Multiplier = 10.10+0.20

Multiplier = 10.30

Multiplier = 103

Multiplier = 3.34

Hence, the value of multiplier is 3.34

Economics Concept Introduction

Concept Introduction:

Multiplier is defined as the ratio of change in equilibrium income with the initial change in autonomous expenditure

Multiplier = change in equilibrium income or real GDPChange in autonomous expenditure

Also, multiplier can be measured from the leakages

Multiplier = 1Leakages

Multiplier = 1MPS+MPI

Where MPS= Marginal Propensity to save

MPI= Marginal Propensity to invest

To determine

(c)

What is the spending multiplier, when MPC=0.80 and MPI=0.30

Expert Solution

Explanation of Solution

We have

MPC=0.80

MPI=0.30

Also, MPC+MPS=1

MPS=1−MPC

MPS=1−0.80

MPS=0.20

Thus, multiplier is calculated as

Multiplier = 1MPS+MPI

Multiplier = 10.20+0.30

Multiplier = 10.50

Multiplier = 105

Multiplier = 2

Hence, the value of multiplier is 2

Economics Concept Introduction

Concept Introduction:

Multiplier is defined as the ratio of change in equilibrium income with the initial change in autonomous expenditure

Multiplier = change in equilibrium income or real GDPChange in autonomous expenditure

Also, multiplier can be measured from the leakages

Multiplier = 1Leakages

Multiplier = 1MPS+MPI

Where MPS= Marginal Propensity to save

MPI= Marginal Propensity to invest

To determine

(d)

What is the spending multiplier, when MPC=0.90 and MPI=0

Expert Solution

Explanation of Solution

We have

MPC=0.90

MPI=0.10

Also, MPC+MPS=1

MPS=1−MPC

MPS=1−0.90

MPS=0.10

Thus, multiplier is calculated as

Multiplier = 1MPS+MPI

Multiplier = 10.10+0

Multiplier = 10.10

Multiplier = 101

Multiplier = 10

Hence, the value of multiplier is 10

Economics Concept Introduction

Concept Introduction:

Multiplier is defined as the ratio of change in equilibrium income with the initial change in autonomous expenditure

Multiplier = change in equilibrium income or real GDPChange in autonomous expenditure

Also, multiplier can be measured from the leakages

Multiplier = 1Leakages

Multiplier = 1MPS+MPI

Where MPS= Marginal Propensity to save

MPI= Marginal Propensity to invest

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Answer 4

Question

Chapter 10, Problem 4E

To determine

(a)

What is the spending multiplier, when MPC=0.90 and MPI=0.10

Expert Solution

Explanation of Solution

We have

MPC=0.90

MPI=0.10

Also, MPC+MPS=1

MPS=1−MPC

MPS=1−0.90

MPS=0.10

Thus, multiplier is calculated as

Multiplier = 1MPS+MPI

Multiplier = 10.10+0.10

Multiplier = 10.20

Multiplier = 102

Multiplier = 5

Hence, the value of multiplier is 5

Economics Concept Introduction

Concept Introduction:

Multiplier is defined as the ratio of change in equilibrium income with the initial change in autonomous expenditure

Multiplier = change in equilibrium income or real GDPChange in autonomous expenditure

Also, multiplier can be measured from the leakages

Multiplier = 1Leakages

Multiplier = 1MPS+MPI

Where MPS= Marginal Propensity to save

MPI= Marginal Propensity to invest

To determine

(b)

What is the spending multiplier, when MPC=0.90 and MPI=0.20

Expert Solution

Explanation of Solution

We have

MPC=0.90

MPI=0.20

Also, MPC+MPS=1

MPS=1−MPC

MPS=1−0.90

MPS=0.10

Thus, multiplier is calculated as

Multiplier = 1MPS+MPI

Multiplier = 10.10+0.20

Multiplier = 10.30

Multiplier = 103

Multiplier = 3.34

Hence, the value of multiplier is 3.34

Economics Concept Introduction

Concept Introduction:

Multiplier is defined as the ratio of change in equilibrium income with the initial change in autonomous expenditure

Multiplier = change in equilibrium income or real GDPChange in autonomous expenditure

Also, multiplier can be measured from the leakages

Multiplier = 1Leakages

Multiplier = 1MPS+MPI

Where MPS= Marginal Propensity to save

MPI= Marginal Propensity to invest

To determine

(c)

What is the spending multiplier, when MPC=0.80 and MPI=0.30

Expert Solution

Explanation of Solution

We have

MPC=0.80

MPI=0.30

Also, MPC+MPS=1

MPS=1−MPC

MPS=1−0.80

MPS=0.20

Thus, multiplier is calculated as

Multiplier = 1MPS+MPI

Multiplier = 10.20+0.30

Multiplier = 10.50

Multiplier = 105

Multiplier = 2

Hence, the value of multiplier is 2

Economics Concept Introduction

Concept Introduction:

Multiplier is defined as the ratio of change in equilibrium income with the initial change in autonomous expenditure

Multiplier = change in equilibrium income or real GDPChange in autonomous expenditure

Also, multiplier can be measured from the leakages

Multiplier = 1Leakages

Multiplier = 1MPS+MPI

Where MPS= Marginal Propensity to save

MPI= Marginal Propensity to invest

To determine

(d)

What is the spending multiplier, when MPC=0.90 and MPI=0

Expert Solution

Explanation of Solution

We have

MPC=0.90

MPI=0.10

Also, MPC+MPS=1

MPS=1−MPC

MPS=1−0.90

MPS=0.10

Thus, multiplier is calculated as

Multiplier = 1MPS+MPI

Multiplier = 10.10+0

Multiplier = 10.10

Multiplier = 101

Multiplier = 10

Hence, the value of multiplier is 10

Economics Concept Introduction

Concept Introduction:

Multiplier is defined as the ratio of change in equilibrium income with the initial change in autonomous expenditure

Multiplier = change in equilibrium income or real GDPChange in autonomous expenditure

Also, multiplier can be measured from the leakages

Multiplier = 1Leakages

Multiplier = 1MPS+MPI

Where MPS= Marginal Propensity to save

MPI= Marginal Propensity to invest

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 10, Problem 4E

To determine

(a)

What is the spending multiplier, when MPC=0.90 and MPI=0.10

Expert Solution

Explanation of Solution

We have

MPC=0.90

MPI=0.10

Also, MPC+MPS=1

MPS=1−MPC

MPS=1−0.90

MPS=0.10

Thus, multiplier is calculated as

Multiplier = 1MPS+MPI

Multiplier = 10.10+0.10

Multiplier = 10.20

Multiplier = 102

Multiplier = 5

Hence, the value of multiplier is 5

Economics Concept Introduction

Concept Introduction:

Multiplier is defined as the ratio of change in equilibrium income with the initial change in autonomous expenditure

Multiplier = change in equilibrium income or real GDPChange in autonomous expenditure

Also, multiplier can be measured from the leakages

Multiplier = 1Leakages

Multiplier = 1MPS+MPI

Where MPS= Marginal Propensity to save

MPI= Marginal Propensity to invest

To determine

(b)

What is the spending multiplier, when MPC=0.90 and MPI=0.20

Expert Solution

Explanation of Solution

We have

MPC=0.90

MPI=0.20

Also, MPC+MPS=1

MPS=1−MPC

MPS=1−0.90

MPS=0.10

Thus, multiplier is calculated as

Multiplier = 1MPS+MPI

Multiplier = 10.10+0.20

Multiplier = 10.30

Multiplier = 103

Multiplier = 3.34

Hence, the value of multiplier is 3.34

Economics Concept Introduction

Concept Introduction:

Multiplier is defined as the ratio of change in equilibrium income with the initial change in autonomous expenditure

Multiplier = change in equilibrium income or real GDPChange in autonomous expenditure

Also, multiplier can be measured from the leakages

Multiplier = 1Leakages

Multiplier = 1MPS+MPI

Where MPS= Marginal Propensity to save

MPI= Marginal Propensity to invest

To determine

(c)

What is the spending multiplier, when MPC=0.80 and MPI=0.30

Expert Solution

Explanation of Solution

We have

MPC=0.80

MPI=0.30

Also, MPC+MPS=1

MPS=1−MPC

MPS=1−0.80

MPS=0.20

Thus, multiplier is calculated as

Multiplier = 1MPS+MPI

Multiplier = 10.20+0.30

Multiplier = 10.50

Multiplier = 105

Multiplier = 2

Hence, the value of multiplier is 2

Economics Concept Introduction

Concept Introduction:

Multiplier is defined as the ratio of change in equilibrium income with the initial change in autonomous expenditure

Multiplier = change in equilibrium income or real GDPChange in autonomous expenditure

Also, multiplier can be measured from the leakages

Multiplier = 1Leakages

Multiplier = 1MPS+MPI

Where MPS= Marginal Propensity to save

MPI= Marginal Propensity to invest

To determine

(d)

What is the spending multiplier, when MPC=0.90 and MPI=0

Expert Solution

Explanation of Solution

We have

MPC=0.90

MPI=0.10

Also, MPC+MPS=1

MPS=1−MPC

MPS=1−0.90

MPS=0.10

Thus, multiplier is calculated as

Multiplier = 1MPS+MPI

Multiplier = 10.10+0

Multiplier = 10.10

Multiplier = 101

Multiplier = 10

Hence, the value of multiplier is 10

Economics Concept Introduction

Concept Introduction:

Multiplier is defined as the ratio of change in equilibrium income with the initial change in autonomous expenditure

Multiplier = change in equilibrium income or real GDPChange in autonomous expenditure

Also, multiplier can be measured from the leakages

Multiplier = 1Leakages

Multiplier = 1MPS+MPI

Where MPS= Marginal Propensity to save

MPI= Marginal Propensity to invest

Answer 6

Chapter 10, Problem 4E

To determine

(a)

What is the spending multiplier, when MPC=0.90 and MPI=0.10

Expert Solution

Explanation of Solution

We have

MPC=0.90

MPI=0.10

Also, MPC+MPS=1

MPS=1−MPC

MPS=1−0.90

MPS=0.10

Thus, multiplier is calculated as

Multiplier = 1MPS+MPI

Multiplier = 10.10+0.10

Multiplier = 10.20

Multiplier = 102

Multiplier = 5

Hence, the value of multiplier is 5

Economics Concept Introduction

Concept Introduction:

Multiplier is defined as the ratio of change in equilibrium income with the initial change in autonomous expenditure

Multiplier = change in equilibrium income or real GDPChange in autonomous expenditure

Also, multiplier can be measured from the leakages

Multiplier = 1Leakages

Multiplier = 1MPS+MPI

Where MPS= Marginal Propensity to save

MPI= Marginal Propensity to invest

Answer 7

Chapter 10, Problem 4E

To determine

(a)

What is the spending multiplier, when MPC=0.90 and MPI=0.10

Answer 8

Expert Solution

Explanation of Solution

We have

MPC=0.90

MPI=0.10

Also, MPC+MPS=1

MPS=1−MPC

MPS=1−0.90

MPS=0.10

Thus, multiplier is calculated as

Multiplier = 1MPS+MPI

Multiplier = 10.10+0.10

Multiplier = 10.20

Multiplier = 102

Multiplier = 5

Hence, the value of multiplier is 5

Answer 9

Expert Solution

Answer 10

Expert Solution

Answer 11

Expert Solution

Answer 12

Economics Concept Introduction

Concept Introduction:

Multiplier is defined as the ratio of change in equilibrium income with the initial change in autonomous expenditure

Multiplier = change in equilibrium income or real GDPChange in autonomous expenditure

Also, multiplier can be measured from the leakages

Multiplier = 1Leakages

Multiplier = 1MPS+MPI

Where MPS= Marginal Propensity to save

MPI= Marginal Propensity to invest

Answer 13

To determine

(b)

What is the spending multiplier, when MPC=0.90 and MPI=0.20

Expert Solution

Explanation of Solution

We have

MPC=0.90

MPI=0.20

Also, MPC+MPS=1

MPS=1−MPC

MPS=1−0.90

MPS=0.10

Thus, multiplier is calculated as

Multiplier = 1MPS+MPI

Multiplier = 10.10+0.20

Multiplier = 10.30

Multiplier = 103

Multiplier = 3.34

Hence, the value of multiplier is 3.34

Economics Concept Introduction

Concept Introduction:

Multiplier is defined as the ratio of change in equilibrium income with the initial change in autonomous expenditure

Multiplier = change in equilibrium income or real GDPChange in autonomous expenditure

Also, multiplier can be measured from the leakages

Multiplier = 1Leakages

Multiplier = 1MPS+MPI

Where MPS= Marginal Propensity to save

MPI= Marginal Propensity to invest

Answer 14

To determine

(b)

What is the spending multiplier, when MPC=0.90 and MPI=0.20

Answer 15

Expert Solution

Explanation of Solution

We have

MPC=0.90

MPI=0.20

Also, MPC+MPS=1

MPS=1−MPC

MPS=1−0.90

MPS=0.10

Thus, multiplier is calculated as

Multiplier = 1MPS+MPI

Multiplier = 10.10+0.20

Multiplier = 10.30

Multiplier = 103

Multiplier = 3.34

Hence, the value of multiplier is 3.34

Answer 16

Expert Solution

Answer 17

Expert Solution

Answer 18

Expert Solution

Answer 19

Economics Concept Introduction

Concept Introduction:

Multiplier is defined as the ratio of change in equilibrium income with the initial change in autonomous expenditure

Multiplier = change in equilibrium income or real GDPChange in autonomous expenditure

Also, multiplier can be measured from the leakages

Multiplier = 1Leakages

Multiplier = 1MPS+MPI

Where MPS= Marginal Propensity to save

MPI= Marginal Propensity to invest

Answer 20

To determine

(c)

What is the spending multiplier, when MPC=0.80 and MPI=0.30

Expert Solution

Explanation of Solution

We have

MPC=0.80

MPI=0.30

Also, MPC+MPS=1

MPS=1−MPC

MPS=1−0.80

MPS=0.20

Thus, multiplier is calculated as

Multiplier = 1MPS+MPI

Multiplier = 10.20+0.30

Multiplier = 10.50

Multiplier = 105

Multiplier = 2

Hence, the value of multiplier is 2

Economics Concept Introduction

Concept Introduction:

Multiplier is defined as the ratio of change in equilibrium income with the initial change in autonomous expenditure

Multiplier = change in equilibrium income or real GDPChange in autonomous expenditure

Also, multiplier can be measured from the leakages

Multiplier = 1Leakages

Multiplier = 1MPS+MPI

Where MPS= Marginal Propensity to save

MPI= Marginal Propensity to invest

Answer 21

To determine

(c)

What is the spending multiplier, when MPC=0.80 and MPI=0.30

Answer 22

Expert Solution

Explanation of Solution

We have

MPC=0.80

MPI=0.30

Also, MPC+MPS=1

MPS=1−MPC

MPS=1−0.80

MPS=0.20

Thus, multiplier is calculated as

Multiplier = 1MPS+MPI

Multiplier = 10.20+0.30

Multiplier = 10.50

Multiplier = 105

Multiplier = 2

Hence, the value of multiplier is 2

Answer 23

Expert Solution

Answer 24

Expert Solution

Answer 25

Expert Solution

Answer 26

Economics Concept Introduction

Concept Introduction:

Multiplier is defined as the ratio of change in equilibrium income with the initial change in autonomous expenditure

Multiplier = change in equilibrium income or real GDPChange in autonomous expenditure

Also, multiplier can be measured from the leakages

Multiplier = 1Leakages

Multiplier = 1MPS+MPI

Where MPS= Marginal Propensity to save

MPI= Marginal Propensity to invest

Answer 27

To determine

(d)

What is the spending multiplier, when MPC=0.90 and MPI=0

Expert Solution

Explanation of Solution

We have

MPC=0.90

MPI=0.10

Also, MPC+MPS=1

MPS=1−MPC

MPS=1−0.90

MPS=0.10

Thus, multiplier is calculated as

Multiplier = 1MPS+MPI

Multiplier = 10.10+0

Multiplier = 10.10

Multiplier = 101

Multiplier = 10

Hence, the value of multiplier is 10

Economics Concept Introduction

Concept Introduction:

Multiplier is defined as the ratio of change in equilibrium income with the initial change in autonomous expenditure

Multiplier = change in equilibrium income or real GDPChange in autonomous expenditure

Also, multiplier can be measured from the leakages

Multiplier = 1Leakages

Multiplier = 1MPS+MPI

Where MPS= Marginal Propensity to save

MPI= Marginal Propensity to invest

Answer 28

To determine

(d)

What is the spending multiplier, when MPC=0.90 and MPI=0

Answer 29

Expert Solution

Explanation of Solution

We have

MPC=0.90

MPI=0.10

Also, MPC+MPS=1

MPS=1−MPC

MPS=1−0.90

MPS=0.10

Thus, multiplier is calculated as

Multiplier = 1MPS+MPI

Multiplier = 10.10+0

Multiplier = 10.10

Multiplier = 101

Multiplier = 10

Hence, the value of multiplier is 10

Answer 30

Expert Solution

Answer 31

Expert Solution

Answer 32

Expert Solution

Answer 33

Economics Concept Introduction

Concept Introduction:

Multiplier is defined as the ratio of change in equilibrium income with the initial change in autonomous expenditure

Multiplier = change in equilibrium income or real GDPChange in autonomous expenditure

Also, multiplier can be measured from the leakages

Multiplier = 1Leakages

Multiplier = 1MPS+MPI

Where MPS= Marginal Propensity to save

MPI= Marginal Propensity to invest

Answer 34

Ch. 10 - Prob. 1E Ch. 10 - Prob. 2E Ch. 10 - Prob. 3E Ch. 10 - Prob. 4E Ch. 10 - Prob. 5E Ch. 10 - Prob. 6E Ch. 10 - Prob. 7E Ch. 10 - Prob. 8E Ch. 10 - Prob. 9E Ch. 10 - Prob. 10E

(a) What is the spending multiplier, when M P C = 0.90 and M P I = 0.10

(a) What is the spending multiplier, when MPC=0.90 and MPI=0.10

Explanation of Solution

(b) What is the spending multiplier, when MPC=0.90 and MPI=0.20

Explanation of Solution

(c) What is the spending multiplier, when MPC=0.80 and MPI=0.30

Explanation of Solution

(d) What is the spending multiplier, when MPC=0.90 and MPI=0

Explanation of Solution

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Chapter 10 Solutions

(a)

What is the spending multiplier, when MPC=0.90 and MPI=0.10

(b)

What is the spending multiplier, when MPC=0.90 and MPI=0.20

(c)

What is the spending multiplier, when MPC=0.80 and MPI=0.30

(d)

What is the spending multiplier, when MPC=0.90 and MPI=0