What would have been the size of the multiplier

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Reference no: EM13209893

Suppose that an initial $40 billion increase in investment spending expands GDP by $40 billion in the first round of the multiplier process. If GDP and consumption both rise by $36 billion in the second round of the process, what is the MPC in this economy?

What is the size of the multiplier?

If, instead, GDP and consumption both rose by $38 billion in the second round, what would have been the size of the multiplier?

Reference no: EM13209893

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