Government spending multiplier in ecentricitia

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In the eclectic economy of Ecentricitia, their currency is the Ecentric dollar (ED). 0.05 of each ED earned by Ecentricites goes to taxes. 0.09 of each ED earned is spent on imports. After taxes, they save 0.15 of each ED. Use this information to answer the following questions.

A. What is the Government spending multiplier in Ecentricitia?

B. What would be the original increase in expenditures if the government wanted to increase total aggregate expenditures (AE) by 100?

Reference no: EM13896802

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