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Suppose that an initial $10 billion increase in investment spending expands GDP by $10 billion in the first round of the multiplier process. If GDP and consumption both rise by $6 billion in the second roiund of the process, what is the MPc in this economy? What is the size of the multiplier? If, instead, GDP and consumption both rose by $8 bilion in the second round, what would have been the size of the multiplier?
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