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Unformatted text preview: I. Carl lives in the Macro Islands. What is Carl’s MPC? (Show the math) II. Wanda lives in the Micro Islands. What is Wanda’s MPS? (Show the math) 2. When businesses in the Macro Islands increased investment by $20 million to attract tourists, aggregate demand increased by $50 million. What is the MPC in the Macro Islands? Explain how you arrived at your answer. 3. Assume taxes increase by $50 and government spending increases by $50. The marginal propensity to consume is 0.75. Explain how GDP is impacted as a result. (Your answer should be a dollar amount and you must show how you arrived at your answer.) * Save this document. You will submit this document as an attachment for assignment 03.04 Marginal and Average Propensities and the Multiplier Formulas....
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- Spring '11
- Decimal, Wanda, Multiplier Formulas