Problem
Simple Spending Multiplier Suppose that the MPC is 0.8, while investment, government purchases, and net exports sum to $500 billion. Suppose also that the government budget is in balance.
a. What is the sum of saving and net taxes when desired spending equals real GDP? Explain.
b. What is the value of the multiplier?
c. Explain why the multiplier is related to the slope of the consumption function.
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.