Problem
1. Does the multiplier actually work? To test it, try "spending" an extra dollar in a roomful of friends to see what the total increase in spending would be. (If you prefer, just simulate what your friends would do.)
2. Calculate the change in equilibrium GNP that would be stimulated by an autonomous increase in gross investment of 50 in an economy with a fairly stable MPC of 2/3. (Students who have read Appendix B in the textbook should also check their answer by using a complete equilibrium model.)
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.