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Why the spending multiplier changes when net exports

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Reference no: EM132479049

In the country of Multiplicia the marginal propensity to consume is 0.75. In addition, I = 200, G = 200 and NX = 200, where Y is real GDP. 

  1. Suppose that net exports depended on income. In particular, suppose that N X = 800 - 0.25Y . What would the spending multiplier be now? 
  2. Explain why the spending multiplier changes when net exports depend on income? 

Reference no: EM132479049

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