Calculation of multiplier and change in investment

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Reference no: EM1314319

In a closed economy without a government sector, consumption is determined as 80% of the income available to households. Investment is autonomous at a level of £450.

A. Calculate the value of the multiplier, given the change in investment.

B. Explain, as if you were explaining to your (non-economist) grandparents. What is the meaning of that multiplier you found in c)?

Reference no: EM1314319

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