What would have been the size of the multiplier

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Reference no: EM131081816

Suppose that an initial $10 billion increase in investment spending expands GDP by $10 billion in the first round of the multiplier process. If GDP and consumption both rise by $6 billion in the second round of the process, what is the MPC in this economy?

Instructions: Round your answer to one decimal place

MPC = ________

What is the size of the multiplier?

Instructions: Round your answer to one decimal place

The multiplier = ________

If, instead, GDP and consumption both rose by $8 billion in the second round, what would have been the size of the multiplier?

The multiplier =

Reference no: EM131081816

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