Explanation Option (d): Spending multiplier is evaluated as shown below. Spending multiplier = Change in real GDP required Change in government spending 5 = 250 billion 50 billion 5 = 5 .0 Since the calculated value is $5, option’d’ is the correct answer . Option (a): Spending multiplier is evaluated as shown below. Spending multiplier = Change in real GDP required Change in government spending $1 .0 = $ 250 billion $50 billion $1 .0 < 5 .0 The value determined is less than 5.0. Thus, option ‘a’ is incorrect . Option (b): Spending multiplier is evaluated as shown below. Spending multiplier = Change in real GDP required Change in government spending $2

Multiplier. | bartleby

$MACROECONOMICS LL\AC 22$

MACROECONOMICS LL\AC 22

21st Edition

ISBN: 9781264344642

Author: McConnell

Publisher: MCG

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