Given:
Change in exports: 15 billion
MPC = 0.75
MPC = Change in Consumption / Change in Disposable income
MPS stands for Marginal Propensity to Consume while MPS stands for Marginal Propensity to Save.
MPC + MPS = 1
MPC = 1 - MPS
MPS = 1 - MPC
Spending Multiplier = 1/MPS
Since MPC = 0.75 then MPS = 0.25
Spending Multiplier = 1/0.25 = 4
Change in Export * Spending Multiplier
15 billion * 4 = 60 billion
The cumulative Korean spending will drop by 60 billion.
The answer is: limiting the types of goods and services produced
When a certain country decided to do a specialization, it will utilize most of their time and effort to one specific sectors. These sectors usually be chosen because that country had a certain competitive advantage over another country due to the resources that they possess.
For example, Malaysia is conducting a specialization in latex related products. They choose to do this because they possess the environment that is perfect for latex tree to grow. Currently, they are among the top three latex producers in the world.
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