25. Suppose the marginal propensity to consume is 0.63, the marginal propensity to import equals 0.08,...
25. Suppose the marginal propensity to consume is 0.63, the marginal propensity to import equals 0.08, and personal income taxes amount to 9 percent of GDP. The spending multiplier for this economy is equal to _____. a. 0.54 b. 0.80 c. 1.25 d. 1.41 e. 1.85
Homework Answers
Spending Multiplier=[1/(1−MPC×(1−tax rate)+MPI)]
Spending Multiplier = [1/(1-0.63*(1-0.09)+0.08)]
Spending Multiplier = 1/ 0.5067
Spending Multiplier = 1.973
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25. Suppose the marginal propensity to consume is 0.63, the
marginal propensity to import equals 0.08,...
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