The marginal propensity to consume in an economy is 0.75 Thus, if the price level...
The marginal propensity to consume in an economy is
0.75
Thus, if the price level is fixed, a
$300 increase in investment
would be expected to increase real GDP by $______???
(Round your answer to the nearest dollar.)
Homework Answers
Answer
Multiplier =1/(1-MPC)
=1/(1-0.75)
=4
Change in GDP =change in investment * multiplier
=300*4
=$1200
the GDP increases by $1200
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