Ask Question
16 September, 17:10

The American Recovery and Reinvestment Act introduced a large amount of government spending into the economy-$789 billion! Suppose the marginal propensity to consume in the United States is 0.75. How much would the program increase total spending in the economy? $ billion (NOTE: You may round to the nearest dollar.)

+2
Answers (1)
  1. 16 September, 17:32
    0
    It will increase total spending by $3156

    Explanation:

    Consider the following formulas

    Government spending multiplier=1 / (-MPC)

    =1 / (1-0.75)

    =4

    The increase in total spending = increase in spending*spending multiplier

    =789*4

    =3156

    It will increase total spending by $3156
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “The American Recovery and Reinvestment Act introduced a large amount of government spending into the economy-$789 billion! Suppose the ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers