The diagram below shows desired aggregate expenditure for a hypothetical economy.Assume the following features of this economy:
∙ marginal propensity to consume (mpc)= 0.75
∙ net tax rate (t)= 0.20
∙ no foreign trade
∙ fixed price level
∙ all expenditure and income figures are in billions of dollars. FIGURE 22-2
-Refer to Figure 22-2.What is the value of the multiplier in this economy?
A)1.33
B)1.67
C)2.0
D)2.5
E)6.67

Question

The diagram below shows desired aggregate expenditure for a hypothetical economy.Assume the following features of this economy:
∙ marginal propensity to consume (mpc)= 0.75
∙ net tax rate (t)= 0.20
∙ no foreign trade
∙ fixed price level
∙ all expenditure and income figures are in billions of dollars.  FIGURE 22-2
-Refer to Figure 22-2.What is the value of the multiplier in this economy?
A)1.33 
B)1.67 
C)2.0 
D)2.5 
E)6.67

Quizplus · Accepted Answer

The Answer of The diagram below shows desired aggregate expenditure for a hypothetical economy.Assume the following features of this economy:
∙ marginal propensity to consume (mpc)= 0.75
∙ net tax rate (t)= 0.20
∙ no foreign trade
∙ fixed price level
∙ all expenditure and income figures are in billions of dollars.  FIGURE 22-2
-Refer to Figure 22-2.What is the value of the multiplier in this economy?
A)1.33 
B)1.67 
C)2.0 
D)2.5 
E)6.67

The Diagram Below Shows Desired Aggregate Expenditure for a Hypothetical