What would have been the size of the multiplier

Reference no: EM13218732

Suppose that an initial $20 billion increase in investment spending expands GDP by $20 billion in the first round of the multiplier process. If GDP and consumption both rise by $10billion 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 $12 billion in the second round, what would have been the size of the multiplier?

Reference no: EM13218732

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