Deriving the Multiplier Algebraically

16. Deriving the Aggregate Expenditures Model / Deriving the Multiplier Algebraically / Problem 8

Problem 8

In a private closed economy, if autonomous consumption is \$200, MPC is 0.75, and investment is \$100, what is the equilibrium GDP?

\$1,000

\$1,500

\$1,200

\$800