if-the-mpc-is-08-what-is-the-multiplier-and-how-would-a-100-billion-increase-in-

Question

If the MPC is 0.8, what is the multiplier, and how would a $100 billion increase in government spending affect GDP?

Accepted Answer

The multiplier is 5, and GDP would increase by $500 billion.

Answer

The multiplier is 2, and GDP would increase by $200 billion.

Answer

The multiplier is 4, and GDP would increase by $400 billion.

Answer

The multiplier is 10, and GDP would increase by $1,000 billion.

If the MPC is 0.8, what is the multiplier, and how would a \$100 billion increase in government spending affect GDP?