View the step-by-step solution to:

Please show work. In order to financially stimulate the nation, the Federal government injected $900 billion dollars into the economy. However, the...

Please show work. 

5. In order to financially stimulate the nation, the Federal government injected $900 billion dollars into the economy. However, the results were less than spectacular. One reason could have been a failure to understand the marginal propensity to consume. Assume the marginal propensity to consume (MPC) was only 0.5. How much of that $900 billion went to increased consumption? Where did the rest of the money go?

Increased consumption: ________________________

Where did the rest go? _________________________

Using MPC = 0.5, what is the multiplier (the actual numerical value please):

___________________

What was the total change in spending as a result of the stimulus package?

__________________

Top Answer

Increased consumption: ________________________1500 billion $ Where did the rest go?... View the full answer

3 comments
  • i asked for you to show your work.
    • lljr45
    • Mar 04, 2016 at 7:20pm
  • am working on the calculations please
    • naomikendy
    • Mar 04, 2016 at 7:21pm
  • the MPC = .5 not .4
    • lljr45
    • Mar 04, 2016 at 7:34pm

Sign up to view the full answer

Why Join Course Hero?

Course Hero has all the homework and study help you need to succeed! We’ve got course-specific notes, study guides, and practice tests along with expert tutors.

-

Educational Resources
  • -

    Study Documents

    Find the best study resources around, tagged to your specific courses. Share your own to gain free Course Hero access.

    Browse Documents
  • -

    Question & Answers

    Get one-on-one homework help from our expert tutors—available online 24/7. Ask your own questions or browse existing Q&A threads. Satisfaction guaranteed!

    Ask a Question
Ask a homework question - tutors are online