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Unformatted text preview: GDP = spending x 1 / (1-MPC) Formula to calculate the change in the recessionary gap: GDP= AD(1/1-MPC) Foreign Trade Multiplier But when you consider imports you have MPS + MPC + MPM = 1 , where MPM = imports/ income Expenditure Multiplier GDP = 1/(MPS + MPM)...
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- Fall '07