Where Marginal Propensity to Consume Is Denoted as MPC, Consider

question 168

Essay

Where marginal propensity to consume is denoted as MPC, consider the following:

a. Assuming no crowding-out and MPC = 0.75, calculate the amount of government spending needed to bring this economy back to full-employment output.
b. Assuming no crowding-out and that $10 billion would be needed to bring this economy back to full-employment output, calculate the MPC in this economy.

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