Question

C = 26 + 0.75Y Ig = 60 X = 24 M = 10 (Advanced analysis) The equations give information for a private open economy. The letters Y, C, Ig, X, and M stand for GDP, consumption, gross investment, exports, and imports, respectively. Figures are in billions of dollars. The multiplier for the economy is______.

Answer 1

Answer:

4

Explanation:

The economies multiplier is calculated by dividing 1 by the marginal propensity to save (MPS). In this case we are given only the marginal propensity to consume (MPC) = 0.75, but the MPS = 1 - MPC = 1 - 0.75 = 0.25

So the economy's multiplier = 1 / MPS = 1 / 0.25 = 4

Answer 2

Answer:

4.0

Explanation:

following information for a private open economy. The letters Y, C, Ig, X, and M stand for GDP, consumption, gross investment, exports, and imports respectively. Figures are in billions of dollars.

C=26+0.75Y

Ig=60

X=24

M=10

The multiplier for the above economy is 4.0