Answered

Find accurate and reliable answers to your questions on IDNLearn.com. Discover trustworthy solutions to your questions quickly and accurately with help from our dedicated community of experts.

how much of a change in gdp will result if firms increase their level of investment by $8 billion and the mpc is 0.80? $ billion how much of a change in gdp will result if firms increase their level of investment by $8 billion and the mpc instead is 0.67? $ billion

Sagot :

Parrainidn

The change in GDP if the MPC is 0.80 and the level of investment is $8 billion, is $40 billion

The change in GDP if the MPC is 0.67 is $24.24 billion.

How to find the change in GDP?

The change in GDP as a result of a change in investment spending can be found by the formula:

= Increase in investment x Multiplier

The multiplier is found by the formula:

= 1 / (1 - MPC)

= 1 / ( 1 - 0.8)

= 5

The change in GDP is therefore:

= 8 billion x 5

= $40 billion

If the MPC is 0.67, the multiplier is:

= 1 / ( 1 - 0.67)

= 3.03

The change in GDP would be:

= 8 billion x 3.03

= $24.24 billion

Find out more on change in GDP at https://brainly.com/question/20595449

#SPJ1

We appreciate every question and answer you provide. Keep engaging and finding the best solutions. This community is the perfect place to learn and grow together. IDNLearn.com provides the answers you need. Thank you for visiting, and see you next time for more valuable insights.