Fill in the blanks in the table below. Assume that the MPC is constant over everyone...

Fill in the blanks in the table below. Assume that the MPC is constant over everyone in the economy.

MPC	Spending Multiplier	Change in Government Spending	Change in Income
	10	100
	2.5		-500
0.5		225
0.2			100

Expert Solution

MPC	Spending Multiplier	Change in Government Spending	Change in Income
0.9	10	100	1000
0.6	2.5	-200	-500
0.5	2	225	450
0.2	1.25	80	100

Spending multiplier=1/(1-MPC)

change in income=change in government spending *multiplier

switching the formula as per required object we can get it.

ex.

10=1/(1-MPC)

10-10MPC=1

MPC=9/10=0.9

change in income=100*10=1000

and so on

Rahul Sunny answered 2 years ago

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