Explore BrainMass
Share

Explore BrainMass

    Simple spending multiplier

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

    9. (Simple Spending Multiplier) For each of the following values for the MPC, determine the size of the simple spending multiplier and the total change in real GDP
    demanded following a $10 billion decrease in autonomous spending:
    a. MPC = 0.9
    b. MPC = 0.75
    c. MPC = 0.6

    © BrainMass Inc. brainmass.com October 9, 2019, 5:20 pm ad1c9bdddf
    https://brainmass.com/economics/macroeconomics/simple-spending-multiplier-54814

    Attachments

    Solution Preview

    Simple Spending Multiplier = 1/(1-MPC)
    MPC Spending ...

    Solution Summary

    Simple spending multiplier is applied.

    $2.19