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SupposSuppose that investment spending rises by $1,000 billion, and the MPC is 0.6, as in Table 5 in the chapter. But, unlike in the table,
SupposSuppose that investment spending rises by $1,000 billion, and the MPC is 0.6, as in Table 5 in the chapter. But, unlike in the table, suppose that each time income rises by one dollar, taxes rise by 10 cents, and transfers fall by 10 cents. Precisely how would the numbers in both columns of the table differ, for each of the first four rounds of the multiplier? Would the final change in real GDP be larger or smaller than $2,500 billion?e that investment spending rises by $1,000 billion, and the MPC is 0.6, as in Table 5 in the chapter. But, unlike in the table, suppose that each time income rises by one dollar, taxes rise by 10 cents, and transfers fall by 10 cents. Precisely how would the numbers in both columns of the table differ, for each of the first four rounds of the multiplier? Would the final change in real GDP be larger or smaller than $2,500 billion
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