Answer to Question #144397 in Macroeconomics for Lebo

Question

Autonomous Consumption = 465

Marginal propensity to consume = 0.6

Autonomous Investment =295

Government expenditure = 450

Exports = 225

Imports = 130 + 0.1Y

T = 0.2Y

Yf = 2 237.9  

Show all calculations:Q.1.2 Calculate the size of the multiplier. (4)

Answer 1

The size of the multiplier is: $m = \frac{1} {1 - 0.6} = 2.5.$