Question
Assume the economy is in short-run equilibrium and there is less than full-employment output. Also assume that the marginal propensity to consume (MPC) is equal
Assume the economy is in short-run equilibrium and there is less than full-employment output. Also assume that the marginal propensity to consume (MPC) is equal to 0.66.
a.What is the value of the government spending multiplier in this case?
b.Given the size of the multiplier, what would be the implied change in income (gross domestic product) from the stimulus spending of $700 billion?
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Legal Fundamentals for Canadian Business
Authors: Richard A. Yates
4th edition
133370283, 978-0133370287
