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Author Question: Multiplier Effect of Government PurchasesSuppose that government spending increases by $2 trillion. ... (Read 153 times)

ncasson210

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on: Nov 23, 2022

Question 1

Multiplier Effect of Government Purchases

If an increase in government spending of $400 billion results in a $1.4 trillion increase in equilibrium real GDP, then the marginal propensity to consume (MPC) is ________. (Round to the nearest hundredth when appropriate.)
◦ 0.65
◦ 0.71
◦ 0.29
◦ 0.35

Question 2

Multiplier Effect of Government Purchases

Suppose that government spending increases by $2 trillion. If the marginal propensity to consume (MPC) is 0.7, then what is the change in real GDP? (Round to the nearest hundredth when appropriate.)
◦ $2.86 trillion
◦ $6.67 trillion
◦ $1.4 trillion
◦ $0.35 trillion
Macroeconomics ¦ Acemoglu, Laibson, List ¦ 3rd Edition
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Marked as best answer by ncasson210 on Nov 23, 2022

reactx

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Reply #1 on: Nov 23, 2022
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ncasson210

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Reply 2 on: Nov 23, 2022
Wow, this really help

LVPMS

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Reply 3 on: Yesterday
Gracias!

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