Economics:
10th Edition
ISBN: 9781285859460
Author: BOYES, William
Publisher: Cengage Learning
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Question
Chapter 10, Problem 7E
To determine
To write:
The multiplier of the economy.
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Suppose that the MPC is .75 and the MPM is .1. What is the size of the multiplier?
I'm doing economics homework and I'm being asked to find the multiplier when the MPS is 0.12 and MPC is 0.88. I'm trying to follow the formula and not sure where I'm getting lost.
Suppose an economy has an MPC = 0.875.
1. If government spending increase by $100, how much will the GDP change?
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- If the ratio of MPS and MPC is 1:4 then find the value of multiplier.arrow_forwardIf the MPC IS 0.9 What should the government do to increase GDP by $4500?arrow_forwardSuppose the MPC = 0.6? What will be the government spending multiplier? If, in this economy, government spending (G) increases by $300, what will happen to Total Spending? Show your workarrow_forward
- Suppose that the initial 10 billion increase in the investment spending expands GDP by 10 billion in the first round of multiplier process. If GDP and consumption both rise by 6 billion in the second round of the process, what is the MPC in this economy? What is the size of the multiplier? If instead, GP and consumption both Rose by 8 billion in the second round, what would’ve been the size of the multiplier? arrow_forwardThe multiplier in the economy is 8.5 and the change in income is $3200 million What would be the change in investmentarrow_forwardWith an MPC of 0.8, government spending increases $20 billion while taxes decrease $10 billion. Based on this data, what is the cumulative effect on GDP?arrow_forward
- Suppose MPS=0.68 and MPI=0.17 19. What is the spending multiplier? 20. What is the level of real GDP if the government increases spending by 300 million dollars? 21. What is the level of real GDP if the government decreases spending by 350 million dollars?arrow_forwardIs the mpc in the multiplier .75? only because multiplier is 1/(1-mpc) which would make sense for .25 1-.75=.25 however what is mps?arrow_forwardInvestment increases by $200 million and the value of MPC is 0.75. What would be the total increase in spending?arrow_forward
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