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Using the Keynesian Government Spending Multiplier is 1/MPS to answer the question below 1
Using the Keynesian Government Spending Multiplier is 1/MPS to
answer the question below
1. The economy has been struggling and on the decline for the past 2 and half
years. The government is desperate to bring about economic growth.
Assume the Government decides to increase their spending by $100,000.00 dollars.
Assume that the MPC in the economy is 90% and the MPS is 10% (these must equal 100%).
What is going to be the effect on the GDP when we consider the Multiplier effect
of EACH of those dollars?
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