Thank you for visiting If the marginal propensity to consume is 0 8 full employment output is 14 trillion and current output is 13 5 trillion then investment spending. This page is designed to guide you through key points and clear explanations related to the topic at hand. We aim to make your learning experience smooth, insightful, and informative. Dive in and discover the answers you're looking for!
Answer :
Answer:
c. Increase by $0.1 trillion
Explanation:
Investment spending Multiplier is a concept in economics that measure how a given change in investment increases output. So if current output of $13.5 trillion must increase to $14 trillion, we employ the multiplier formula to derive what amount of investment spending is needed to get $o.5trillion increase in output.
(change in output)/ (change in investment) = 1/(1-mpc)
Note that mpc means marginal propensity to consume.
Let change in investment = X
change in output = 14 - 13.5 = $0.5trillion
mpc = 0.8
(0.5)/X = 1(1-0,8)
0.5/X = 1/0.2
cross multiply
X = 0.1
Thus the needed change in investment is an increase of $0.1 trillion. In other words, if investment increases by $0.1 trillion, current output will increase from $13.5 trillion to $14 trillion.
Thank you for reading the article If the marginal propensity to consume is 0 8 full employment output is 14 trillion and current output is 13 5 trillion then investment spending. We hope the information provided is useful and helps you understand this topic better. Feel free to explore more helpful content on our website!
- You are operating a recreational vessel less than 39 4 feet long on federally controlled waters Which of the following is a legal sound device
- Which step should a food worker complete to prevent cross contact when preparing and serving an allergen free meal A Clean and sanitize all surfaces
- For one month Siera calculated her hometown s average high temperature in degrees Fahrenheit She wants to convert that temperature from degrees Fahrenheit to degrees
Rewritten by : Jeany
