In the IS–LM model, a decrease in the interest rate would be the result of a(n): increase in government purchases. increase in t
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is the total implied increase in economic spending activity from a government stimulus of
billion
<u>Explanation: </u>
The median product preference tests the increase in expenditure due to changes in availability.
In increasing government expenditure, total economic investment would be increased by the scale of the budget multiplier. In other terms, the expenditure equation indicates how much GDP can increase as government expenditure increases.
The spending multiplier can be expressed as
So, the total implied increase in economic spending is
In economics, marginal propensity to consume (MPC) is the proportion of an aggregate raise in pay that consumer spends on the consumption of services and goods, as opposed to saving it.