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Author Question: Calculate the multiplier and the change in real GDP. What will be an ideal ... (Read 48 times)

karateprodigy

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on: Jun 29, 2018
Calculate the multiplier and the change in real GDP.
 
  What will be an ideal response?

Question 2

Refer to Figure 2-13. If the two countries have the same amount of resources and the same technological knowledge, which country has an absolute advantage in the production of both pineapples and coconuts?
 
  A) neither country B) Costa Rica
  C) Guatemala D) cannot be determined


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wshriver

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Reply #1 on: Jun 29, 2018
Answer to Question 1

With no imports and no income taxes, the multiplier equals 1/(1  MPC). So the multiplier is 1/(1  0.8), which is 5.0 Then the 5 billion increase in investment increases real GDP by 5.0  5 billion, which is 25 billion.

Answer to Question 2

A


karateprodigy

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Reply 2 on: Jun 29, 2018
Great answer, keep it coming :)

anyusername12131

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Reply 3 on: Yesterday
YES! Correct, THANKS for helping me on my review

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