65 871
Assignments Done
99,1%
Successfully Done
In October 2018

Answer to Question #52328 in Macroeconomics for Ben

Question #52328
Suppose the marginal propensity to consume (MPS) equals 0.20, an increase in autonomous investment of $100 will lead to an increase in real Gross Domestic Product (GDP) by:
Expert's answer
Multiplier effect is an effect in economics, in which an increase in spending produces an increase in national income and consumption greater than the initial amount spent. If MPS = 0.20, then multiplier is m = 1/mps = 5, so an increase in autonomous investment of $100 will lead to an increase in real Gross Domestic Product (GDP) by 100*5 = $500. 

Need a fast expert's response?

Submit order

and get a quick answer at the best price

for any assignment or question with DETAILED EXPLANATIONS!

Comments

No comments. Be first!

Leave a comment

Ask Your question

Submit
Privacy policy Terms and Conditions