QQuestionAnatomy and Physiology
QuestionAnatomy and Physiology
# Question 2
Ruth Langmore has recently been given an inheritance, and she decides to take this $\$ 250,1$ of this money to invest in her new business venture wither her brother, Wyatt Langmore. The marginal propensity to consume is currently 0.65 .
a) What is the spending multiplier? Carry out the calculation to four decimal places.
b) What is the change in equilibrium/aggregate income?
c) What would happen to equilibrium/aggregate income if Ruth and Wyatt decided to consume or spend the $\$ 250,1$ instead of investing it?
d) According to the lectures, what variables will be affected by the spending multiplier?
Attachments
6 months agoReport content
Answer
Full Solution Locked
Sign in to view the complete step-by-step solution and unlock all study resources.
Step 1
Multiplier = \frac{1}{1-0.65} = \boxed{2.6667}
In this case, the MPC is 0.65. So, (four decimal places: 2.6667)
Final Answer
Multiplier = \frac{1}{1 - 0.65} = \boxed{2.6667}
Need Help with Homework?
Stuck on a difficult problem? We've got you covered:
- Post your question or upload an image
- Get instant step-by-step solutions
- Learn from our AI and community of students