Answer to Question #75439 in Macroeconomics for Esteban

Question #75439

If the desired fiscal stimulus is $40 billion and the desired AD increase is $50 billion, we can conclude about the MPC and multiplier?

Expert's answer

MPC = fiscal stimulus / AD = 40/50 = 0.8
multiplier = AD / fiscal stimulus = 50/40 = 1.25

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