Explore BrainMass

Explore BrainMass

    A Discussion on the Multiplier Process

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    The economy starts at equilibrium and the MPC = 0.75. What would be the effect of a $300 increase in government spending once all the rounds of the multiplier process are complete?

    © BrainMass Inc. brainmass.com October 9, 2019, 11:25 pm ad1c9bdddf

    Solution Preview

    The multiplier is given by

    Multiplier = 1/MPS

    and we ...

    Solution Summary

    This solution presents a very brief formula and explanation in order to calculate the effect of an increase in taxes when all rounds of the multiplier process is complete. All calculations are provided.