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Suppose that an initial $10 billion increase in investment spending expands GDP by $10 billion in the first round of the multiplier process. Also assume
Suppose that an initial $10 billion increase in investment spending expands GDP by $10 billion in the first round of the multiplier process. Also assume that GDP and consumption both rise by $8 billion in the second round of the process. Instructions: Round your answers to 1 decimal place. a. What is the MPC in this economy? $ 0.3 . 8 02:32:19 '\\l b. What is the size of the multiplier? 5 . c. If. instead, GDP and consumption both rose by $9 billion in the second round. what would have been the size of the multiplier? 10
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