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Result of the stimulus package

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Reference no: EM131334553

In order to financially stimulate the nation, the Federal government injected $800 billion dollars into the economy. However, the results were less than spectacular. One reason could have been a failure to understand the marginal propensity to consume. Assume the marginal propensity to consume (MPC) was only 0.4. How much of that $800 billion went to increased consumption? Where did the rest of the money go?

Increased consumption: ________________________

Where did the rest go? _________________________

Using MPC = 0.4, what is the multiplier (the actual numerical value please):

What was the total change in spending as a result of the stimulus package?

Reference no: EM131334553

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