Suppose that an initial $40 billion increase in investment spending expands GDP by $40 billion in the first round of the multiplier process. Also assume that GDP and consumption both rise by $36 billion in the second round of the process. Instructions: Round your answers to 1 decimal place

a. What is the MPC in this economy? $

b. What is the size of the multiplier?

c. If, instead, GDP and consumption both rose by $38 billion in the second round, what would have been the size of the multiplier? .