Figure 11-1

-In Figure 11-1, the slope of the expenditures schedule is 0.75, and the government wishes to achieve full employment.It should

Question

Figure 11-1
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-In Figure 11-1, the slope of the expenditures schedule is 0.75, and the government wishes to achieve full employment.It should

Quizplus · Accepted Answer

The slope of the expenditures schedule (marginal propensity to consume) is 0.75, indicating a multiplier of 4 (1/(1-0.75)). To achieve full employment, the government should increase spending by 250, as this will have a multiplied effect of 1,000 (250 x 4) on the economy.

Figure 11-1 ​

Figure 11-1