If the MPC were .75,what change in government spending (in billions of dollars)would be required to cause the equilibrium level of GDP to fall by 100?

Name: If the MPC were .75,what change in government spending (in billions of dollars)would be required to cause the equilibrium level of GDP to fall by 100?
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Question

Quizplus · Accepted Answer

The multiplier is 1/(1-MPC) = 1/(1-0.75) = 4. To decrease GDP by 100 billion, government spending must decrease by 100/4 = 25 billion.

If the MPC Were