Illustrate what would they approximate marginal propensity

Assignment Help Business Economics

Reference no: EM1371109

Q. Suppose economists observe that an increase in government spending of $10 billion raises total demand for goods and services by $30 billion.

a. If se economists ignore possibility of crowding out, illustrate what would they approximate marginal propensity to consume (MPC) to be?

b. Now suppose economist allow for crowding out. Would their new approximate of MPC be larger or smaller than their initial one?

Reference no: EM1371109

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