Explain the multiplier concept and show how it is calculated

Reference no: EM133336850

Question a) Explain the "multiplier concept and show how it is calculated

Question b) Assume that you are aware that the Jamaican economy's investment multiplier is 4 and a ii. iii. iv. foreign investor enters the economy with $100m: Calculate the value ofthe marginal propensity to consume (MPC). By how much will equilibrium GDP change with the injection ofSIOOm'.' Show in tabular form the cumulative spending increase after five "rounds" of spending. Ifthe MPC of the economy is adjusted to 0.5 what would be the new value of the multiplier?

Reference no: EM133336850

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