1. (20%) Explain how and why the value of the simple multiplier (1/(1-MPC)] be different under...

1. (20%) Explain how and why the value of the simple multiplier (1/(1-MPC)] be different under the following conditions (please no algebra; provide a qualitative discussion):

a. Investment is a positive function of real output

b. There are income taxes.

Expert Solution

Rahul Sunny answered 1 year ago

In a simple two-sector Keynesian model, if MPC=75%, what is the size of the multiplier? ...

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