1 Given that marginal propensity to consume in Canada is 66%

Perform the following calculations.

a)How much is the marginal propensity to save (mps) ? (1)

Mpc=

b)How much is the income multiplier ? (1)

c)How much is the Tax multiplier? (1)

2.The Canadian government wants to stimulate the economy from recession with $250b, using a marginal propensity to consume (mpc) of 66%

a)How much incomes will be generated in the economy at the end of the exercise? (2)

• b)How much incomes will be generated in the economy if the government were to use the tax multiplier instead? (2)