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Author Question: Multiplier Effect of Government PurchasesIf an increase in government spending of $400 billion ... (Read 234 times)

gboileau

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on: Nov 23, 2022

Question 1

Multiplier Effects

Suppose that investment spending decreases by $50 million. If the marginal propensity to consume (MPC) is 0.55, then what is the change in real GDP? (Round to the nearest hundredth when appropriate.)
◦ -$0.01 million
◦ -$27.5 million
◦ -$111.11 million
◦ -$90.91 million

Question 2

Multiplier Effect of Government Purchases

If an increase in government spending of $400 billion results in a $2.0 trillion increase in equilibrium real GDP, then the government purchases multiplier is ________. (Round to the nearest hundredth when appropriate.)
◦ 400
◦ 800
◦ 200
◦ 0.5
Macroeconomics ¦ Acemoglu, Laibson, List ¦ 3rd Edition
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Marked as best answer by gboileau on Nov 23, 2022

kyledifference

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Reply #1 on: Nov 23, 2022
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gboileau

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Reply 2 on: Nov 23, 2022
YES! Correct, THANKS for helping me on my review

dreamfighter72

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Reply 3 on: Yesterday
Wow, this really help

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