Consider a demand-determined model, with a marginal propensity to consume of 0.80, a marginal propensity to import of 0.25 and a tax rate of 0.20. How much of an increase in economic activity would be generated by a $150 million increase in government spending? (Answers in millions, with no dollar sign - ie. $125,500,000 represented as 125.5) Answer is 245.9, show workings, thanks.
Consider a demand-determined model, with a marginal propensity to consume of 0.80, a marginal propensity to import of 0.25 and a tax rate of 0.20. How much of an increase in economic activity would be generated by a $150 million increase in government spending? (Answers in millions, with no dollar sign - ie. $125,500,000 represented as 125.5) Answer is 245.9, show workings, thanks.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Consider a demand-determined model, with a marginal propensity to consume of 0.80, a marginal propensity to import of 0.25 and a tax rate of 0.20. How much of an increase in economic activity would be generated by a $150 million increase in government spending? (Answers in millions, with no dollar sign - ie. $125,500,000 represented as 125.5)
Answer is 245.9, show workings, thanks.
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