The marginal propensity to consume (MPC) for this economy is , and the spending multiplier for this economy is Suppose the government in this economy decides to decrease government purchases by $250 billion. The decrease in government spending will lead . This decreases income yet again, leading to a to a decrease in income, creating an initial change in consumption equal to second change in consumption equal to . The total change in demand resulting from the initial change in government spending is

The marginal propensity to consume (MPC) for this economy is , and the spending multiplier for this economy is Suppose the government in this economy decides to decrease government purchases by $250 billion. The decrease in government spending will lead . This decreases income yet again, leading to a to a decrease in income, creating an initial change in consumption equal to second change in consumption equal to . The total change in demand resulting from the initial change in government spending is

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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If the marginal propensity to consume equals 0.80, the tax rate equals 0.20, and the marginal propensity to import equals 0.05, what is the value of the government purchases multiplier? The government purchases multiplier is equal to (enter your response rounded to two decimal places).
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