C = $5 million + 0.9(1 - 0.1)Y
I = $7 million
G = $6 million
NX = $1 million
Based on the above data,the value of the expenditure multiplier is

Name: C = $5 million + 0.9(1 - 0.1)Y I = $7 million G = $6 million NX = $1 million Based on the above data,the value of the expenditure multiplier is
Brand: Quizplus
Rating: 4.8 (60 reviews)

Question

C = $5 million + 0.9(1 - 0.1)Y
 I = $7 million
G = $6 million
NX = $1 million
Based on the above data,the value of the expenditure multiplier is

Quizplus · Accepted Answer

The expenditure multiplier is calculated as 1/(1-MPC), where MPC is the marginal propensity to consume. Here, MPC is 0.9 * (1 - 0.1) = 0.81. Therefore, the multiplier is 1/(1-0.81) = 5.26.

C = $5 Million + 0.9(1 - 0.1)Y