Question
In each of the following cases, calculate the values of MPC, MPW, and the spending multiplier. Enter your responses below rounded to 2 decimal places.
In each of the following cases, calculate the values of MPC, MPW, and the spending multiplier. Enter your responses below rounded to 2 decimal places. a. A $7 million increase in income leads to a $1,750,000 rise in consumption on domestic items. MPC is therefore , MPW is and the spending multiplier is . b. A $9 million decrease in income results in a $0.9 million drop in consumption on domestic items. MPC is therefore , MPW is and the spending multiplier is . c. A $5 million decrease in income causes a $4.5 million drop in withdrawals. MPC is therefore , MPW is and the spending multiplier is .
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