Suppose autonomous government spending increases by $100 billion and the value of the MPC is 0.6. Use the following table to compute four rounds of the spending multiplier effect. New Consumption Spending Round Components of Total Spending (Billions of dollars) 1 Investment Consumption 3 Consumption Consumption After an infinite number of spending-output-spending rounds, the total change in real GDP resulting from the $100 billion increase in governr spending is S billion.

Suppose autonomous government spending increases by $100 billion and the value of the MPC is 0.6. Use the following table to compute four rounds of the spending multiplier effect. New Consumption Spending Round Components of Total Spending (Billions of dollars) 1 Investment Consumption 3 Consumption Consumption After an infinite number of spending-output-spending rounds, the total change in real GDP resulting from the $100 billion increase in governr spending is S billion.

Microeconomics A Contemporary Intro

10th Edition

ISBN:9781285635101

Author:MCEACHERN

Publisher:MCEACHERN

Chapter14: Transaction Costs, Imperfect Information, And Behavioral Economics

Section: Chapter Questions

Problem 4QFR

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