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Real Disposable Income Consumption Investment Aggregate Expenditure 0 200 100 300 100 225 100 325 200 250 100 350 300 275 100 375 400 300
Real Disposable Income
Consumption
Investment
Aggregate Expenditure
0
200
100
300
100
225
100
325
200
250
100
350
300
275
100
375
400
300
100
400
500
325
100
425
600
350
100
450
700
375
100
475
800
400
100
500
- Explain the concept of the spending multiplier. How is it calculated? Calculate the spending multiplier given a marginal propensity to consume of 0.6?
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