Ask a New Question

Question

If the marginal propensity to consume is 2/3, and there is no investment accelerator or crowding out, what would happen to AD or AS, the price level (P) and the real GDP (Y) if government expenditures increases by $20 billion? Also show what happens graphically.
17 years ago

Answers

economyst
Take a shot, what do you think. Hint, the government spending multiplier is 1/mps = 1/.33333 = 3.
17 years ago
Anonymous
vbv
12 years ago

Related Questions

Suppose the marginal propensity to consume is 0.75. What does this mean? What do we know about the m... Will marginal propensity to spend (d) will be low if, propensity to import (m) is low, marginal pr... Will marginal propensity to spend (d) will be low if, propensity to import (m) is low, marginal pr... Calculating Marginal Propensity to Save and Marginal Propensity to Consume Consider the following... What does a marginal propensity in import decrease look like in a graph? Thank you so much in adv... If the marginal propensity to save equals 0.25 calculate the change in government spending that coul... If the marginal propensity to consume (MPC) is 0.75, the value of the multiplier is a. 0.75. b... If the marginal propensity to save (MPS) is 0.10, the marginal propensity to import is 0.05 and the... If the marginal propensity to consume (MPC) is 0.60, what is the expenditure multiplier? 0.4....
Ask a New Question
Archives Contact Us Privacy Policy Terms of Use