Answer to Question #5509 in Macroeconomics for George
MPC=0.4
Size of imports and taxes =0
What will be the size of aggregate expenditure multiplier?
1
2011-12-06T10:58:27-0500
Aggregate expenditure multiplier = 1 / MPS, MPS = 1 - MPC, so we have:
aggregate expenditure multiplier = 1/ (1 - 0.4) = 5/3 ≈ 1.67
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