Essay

Suppose the MPC = 0.90 and there are no taxes or imports. What dos the multiplier equal? If the initial equilibrium aggregate expenditure is $12 trillion, what will be the effect on aggregate expenditure of a $100 billion increase in investment?
Correct Answer:
Verified
The multiplier equals 1/(1 - MPC), so th...
View Answer
Unlock this answer now
Get Access to more Verified Answers free of charge
Related Questions
Q422: Discuss how the marginal propensity to consume,
Q426: An increase in the price level shifts
Unlock this Answer For Free Now!
View this answer and more for free by performing one of the following actions
Scan the QR code to install the App and get 2 free unlocks
Unlock quizzes for free by uploading documents