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Sonbull [250]
3 years ago
11

Two​ countries, A and B​, both are currently in recession. The values of the MPS for A and B are 0.1 and 0.5 respectively. The g

overnments of both countries are planning to boost income through an expansionary policy of a tax cut of​ $1 billion.
Business
1 answer:
aksik [14]3 years ago
3 0

Answer:

Explanation:

The policy of tax cut will be less effective in country B than in country A since the value of the tax multiplier is lower in country B.

The multiplier effect refers to the increase in final income arising from any new injections.

Calculating the Multiplier Effect for a simple economy

k = 1/MPS

A = 1/0.1 =10

B= 1/.5=2

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5 0
3 years ago
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Suppose that after hurricane​ Irene, the average income in Cape​ Charles, Virginia decreased by 16 percent. In response to this
SIZIF [17.4K]

Answer:

0.875

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I hope my answer helps you

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