Where does the answer of (32) come from in the following question? Q: By how much...
Where does the answer of (32) come from in the following question?
Q: By how much will RGDP change if businesses increase their level of investment spending by $8 billion and the MPC in the economy is ¾?
A: 32
Homework Answers
Answer
Yes.
Multiplier =1/(1-MPC)
=1/(1-(3/4))
=4
change in RGDP =change in investments * multiplier
=8*4
=$32 billion
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