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"The cost of rebuilding the Philippines after typhoon Haiyan could reach USD 5.8bn", a senior official has said. Assume the government of Australia Department of Foreign Affairs and Trade provided a grant of USD 5.8 billion. Also assume that despite the hardships the Philippine families experienced, 15% was the beneficiary savings from the Australian grant. Further, assume all other factors remain constant.
i. Calculate the total effect of the spending multiplier of the Australian government grant on the Philippine economy GDP growth.
ii. Examine the overall multiplier effect of the USDS.8 billion grant on the Philippine economy.
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