Simple spending multiplier
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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
Simple Spending Multiplier = 1/(1-MPC)
MPC Spending ...
Simple spending multiplier is applied.