Solved by Expert Tutors
Businesses in the nation of Islandia have been accumulating cash because they havea pessimistic outlook of the national economy.
Solved by Expert Tutors
Question

Businesses in the nation of Islandia have been accumulating cash

because they have a pessimistic outlook of the national economy. Recent changes in the economic outlook of Islandia have caused business leaders to begin to invest some of their accumulated cash. Suppose that businesses in the country invest a total of $30 billion of this cash. 
 
Instructions: Enter a positive number to show an increase and a negative number to show a decrease.
 
a. What would be the maximum expected change in GDP if Islandia's marginal propensity to consume (MPC) is 0.9? 
 
    $   billion
 
b. Suppose that the recent economic outlook in the country of Mountainia has been the opposite. Businesses have postponed planned investments and have begun to accumulate cash. If businesses in Mountainia postpone $8 billion of their planned investments, what would be the maximum expected change in GDP if its marginal propensity to save (MPS) is 0.05?
 
    $   billion

Step-by-step answer

p

ng elit. Namuscnec facili


s

ng elit. Namuscng elit. Nam

acinia pulvi

, consectetur adipiscing elit. Nam lacinia pulvinar tort

a. Fusce dui lectus, congunec facili


, consectetur adipiscing elit. Nam lacinia pulvinar tort

risus ante, dapibus ang elit. Nam


m ipsum dolor sit amet, consec

Subscribe 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.

  • -

    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