contestada

If the marginal propensity to consume is 0.8 and government purchases of goods and services decrease by $30 billion, real GDP will decrease by $24 billion. False True

Respuesta :

Answer:

false

Explanation:

Mathematically;

Multiplier = 1/1-mpc

From the question, mpc = 0.8

Multiplier = 1/(1-0.8) = 1/0.2 = 5

Now if government purchases decrease by $30 billion, then it is expected that the real GDP will decrease by 30 * 5 = $150 billion

Hence, the value of 24 billion is false

Otras preguntas