Chapter 7: Economic Growth, Business Cycles, Unemployment ...

The multiplier is 4.0, calculated as [1/(1 - mpc)]. To generate a $2000 increase in income, increase government spending by $500. b. If the mpc is .66, the multiplier is 2.94, which means that to generate a $2000 increase in income, government spending would have to increase by $680.27. c. ................
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