Refer to the information provided in Table 24.7 below to answer the question(s) that follow.
Table 24.7
All Numbers are in $ Million
-Refer to Table 24.7. The government spending multiplier in this economy is

Question

Refer to the information provided in Table 24.7 below to answer the question(s) that follow.
Table 24.7
All Numbers are in $ Million 
-Refer to Table 24.7. The government spending multiplier in this economy is

Quizplus · Accepted Answer

The government spending multiplier is calculated as 1/1-MPC (where MPC = Marginal Propensity to Consume). In this case, the MPC is 0.2 (as given in the table) and thus, the government spending multiplier is 1/0.8 = 5. Therefore, the answer is option C.

Refer to the Information Provided in Table 24