What will be the value of expenditure multiplier

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Reference no: EM132007820

Suppose that federal expenditures increase by $1 billion. Assume that when consumers have additional income, they pay 10% in taxes, save 5%, spend 5% on imports, and consume the rest.

a. What will be the value of the expenditure multiplier in this instance?

b. What will be the total increase in aggregate demand from the $1 billion?

Reference no: EM132007820

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