Quiz #4 Macroeconomics

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)