Solved: Assume investment spending increases by 10 billion aed, Macroeconomics

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Assume investment spending increases by 10 billion aed

1) The multiplier. Assume the MPC is 3/4.

a) What is the value of the multiplier?

b) Assume investment spending increases by 10 billion AED. Calculate the first through the five rounds of spending in the economy. Why is the effect reduced in each round?

c) Calculate the total change in GDP arising from this increase in investment. Comment

d) How much must government spending increase in order to increase GDP with 10 B?

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Macroeconomics: Assume investment spending increases by 10 billion aed

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Macroeconomics: Assume investment spending increases by 10 billion aed

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