7. If marginal propensity to consume (mpc) is 0.8, tax rate (t) is 0.2, and marginal...

Question

Question

business economics

Answer 1

Answer #1

7) b

Multiplier = 1/(1-mpc+tmpc + mpm)

= 1/ (1-0.8+0.2*0.8 + 0.14) = 2

8) d

Change in income = multiplier *change in G

100= 2 * change in G

Change in G = 50

Answer 2

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