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how much of a change in gdp will result if firms increase their level of investment by $8 billion and the mpc is 0.80? $ billion how much of a change in gdp will result if firms increase their level of investment by $8 billion and the mpc instead is 0.67? $ billion



Answer :

Parrain

The change in GDP if the MPC is 0.80 and the level of investment is $8 billion, is $40 billion

The change in GDP if the MPC is 0.67 is $24.24 billion.

How to find the change in GDP?

The change in GDP as a result of a change in investment spending can be found by the formula:

= Increase in investment x Multiplier

The multiplier is found by the formula:

= 1 / (1 - MPC)

= 1 / ( 1 - 0.8)

= 5

The change in GDP is therefore:

= 8 billion x 5

= $40 billion

If the MPC is 0.67, the multiplier is:

= 1 / ( 1 - 0.67)

= 3.03

The change in GDP would be:

= 8 billion x 3.03

= $24.24 billion

Find out more on change in GDP at https://brainly.com/question/20595449

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