An economy is currently in equilibrium. The following figures refer to elements in its national income accounts. A) If national income now rises by £12 billion, and as a result, the consumption of domestically produced goods rises to £68 billion. Calculate the marginal propensity to consume (MPC). B) What is the value of the multiplier? C) Comment on the results in part (a) and (b).

An economy is currently in equilibrium. The following figures refer to elements in its national income accounts. A) If national income now rises by £12 billion, and as a result, the consumption of domestically produced goods rises to £68 billion. Calculate the marginal propensity to consume (MPC). B) What is the value of the multiplier? C) Comment on the results in part (a) and (b).

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter22: Inflation

Section: Chapter Questions

Problem 18RQ: What is deflation?

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