The government spent $ 49 billion for various infrastructure upgrades. If the marginal propensity to consume...
The government spent $ 49 billion for various infrastructure upgrades. If the marginal propensity to consume is 0.74 ?, the marginal propensity to save is ? . ?(Enter your response rounded to two decimal? places.) The increased government spending created ?$ ? billion of additional spending. ?(Enter your response rounded to two decimal? places.)
Homework Answers
MPC + MPS = 1
0.74 + MPS =1
MPS = 1- 0.74
= 0.26
Govt multiplier = 1/(1- MPC)
= 1/(1 - 0.74)
= 1/0.26
= 3.84
so the increased government spending is = 3.84(49)
= 188.46
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