Log in
Economics
1
answer
2
watching
685
views
12 Aug 2018

What will the multiplier be when the MPS is 0, .4, .6, and 1? What will it be when the MPC is 1, .90, .67, .50 and 0? How much of a change in GDP will result if firms increase their level of investment by $8 billion and the MPC is .80? If the MPC instead is .67?

Watch
1
answer
2
watching
685
views

For unlimited access to Homework Help, a Homework+ subscription is required.

Keith Leannon
Keith LeannonLv2
13 Aug 2018

Unlock all answers

Get 1 free homework help answer.
Already have an account? Log in
Share

Related textbook solutions

Principles of Economics
2nd Edition, 2017
Openstax
ISBN: 9781947172364
Principles of Macroeconomics
2 Edition,
Openstax
ISBN: 9781947172388
Principles of Microeconomics
2 Edition,
Openstax
ISBN: 9781947172340

Related questions

1. What is the multiplier effect?

2. What relationship does the PC bear to the size of the multiplier and the MPS?

3. What will the multiplier when the MPS is 0.4, 0.6, 1,½, and 0?

4. How much of a change in the economy will result if businesses increase their level of investment by $8 Billion and the MPC in the economy is 4/5 and if it is 2/3

1. a. By how much will GDP change if firms increase their investment by $11 billion and the MPC is 0.8

b. If the MPC is 0.5, by how much will GDP rise?

c. Suppose that a certain country has an MPC of 0.8 and a real GDP of $500 billion. If its investment spending decreases by $12 billion, what will be its new level of real GDP?

Due to an increase in consumer wealth, there is a $40 billion autonomous increase in consumer spending in the economies of Westlandia and Eastlandia. Assuming that the aggregate price level is constant, the interest rate is fixed in both countries, and there are no taxes and no foreign trade, complete the accompanying tables to show the various rounds of increased spending that will occur in both economies if the marginal propensity to consume is 0.5 in Westlandia and 0.75 in Eastland. What do your results indicate about the relationship between the size of the marginal propensity to consume and the multiplier?

Incremental Total change change Rounds in GDP in GDP 1 C = $40 billion ? 2 MPC — C = ? ? 3 MPC — MPC — C = ? ? 4 MPC — MPC — MPC — C = ? ? . . . . . . . . .

Total change in GDP (1/(1 MPC)) C ? Eastlandia Incremental Total change change Rounds in GDP in GDP 1 C = $40 billion ? 2 MPC — C = ? ? 3 MPC — MPC — C = ? ? 4 MPC — MPC — MPC — C = ? ? . . . . . . . . . Total change (1/(1 MPC)) C?

Weekly leaderboard

Home
Homework Help 3,900,000
Economics 400,000
Start filling in the gaps now
Log in