Marginal propensity to consume is 0.8, and there is no trade, taxes or transfers in this...

Question

Question

Answer 1

Answer #1

Ans) the correct option is b) 5 billion dollars worth of spending due to multiplier effect

Change in real GDP = change in investment / (1-MPC)

Change in real GDP = 1/(1 - 0.8) = 5

Answer 2

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