If the MPC were .5,what change in government spending (in billions of dollars)would be required to cause the equilibrium level of GDP to rise by 100?

Name: If the MPC were .5,what change in government spending (in billions of dollars)would be required to cause the equilibrium level of GDP to rise by 100?
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Question

Quizplus · Accepted Answer

The spending multiplier is calculated as 1/(1-MPC). With an MPC of 0.5, the multiplier is 2. To increase GDP by 100, government spending must increase by 100/2 = 50 billion dollars.

If the MPC Were