Suppose that investment demand increases by $300 billion in a closed and private economy (no government or
Question:
Suppose that investment demand increases by $300 billion in a closed and private economy (no government or foreign trade). Assume further that households have a marginal propensity to consume of 75 percent.
(a) Compute four rounds of multiplier effects.
(b) What will be the final cumulative impact on spending?
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Related Book For
The Macro Economy Today
ISBN: 978-1259291821
14th edition
Authors: Bradley R. Schiller, Karen Gebhardt
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