Answer to Question #138045 in Macroeconomics for James

Question #138045

Calculate the size of the multiplier given the following information: (1)
c = 0.4
Government Spending = 100 000
a) 166666.6
b) 1.66
c) 16.6
d) 250 000

Expert's answer

Multiplier = 1/(1-MPC)

Multiplier = 1/(1-0.4) = 1/(0.6) = 1.6666..

Mutiplier is b= 1.66

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