From Mpc
Posted in Aircraft Model by admin
on February 24, 2009
As the MPC increases, will the Multiplier increase or decrease?
As the MPC increases, will the Multiplier increase or decrease
Assuming that the MPC= 0.55, what is the multiplier? How big will the change in GDP be from a $20 million increase in investment spending (I)?
How big will the change in GDP be from a $20 million increase in government spending (G)?
so as the MPC increases so does the multiplier.
the formula to calculate the multiplier is 1/MPS....... with your MPS being 0.45 because 1=MPS+MPC
k=1/0.45=2.222
change in GDP=$24.444 million
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