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Multiplier Practice Worksheet 16.2

The document shows the multiplier effect of an initial $25 increase in government expenditure. It calculates the increase in consumption from the first and second rounds as $15 and $9 respectively, due to the MPC of 0.6. The total increase in economic activity is $62.5 in the first round and $37.5 in the second round.

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Tinotenda Dube
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73 views2 pages

Multiplier Practice Worksheet 16.2

The document shows the multiplier effect of an initial $25 increase in government expenditure. It calculates the increase in consumption from the first and second rounds as $15 and $9 respectively, due to the MPC of 0.6. The total increase in economic activity is $62.5 in the first round and $37.5 in the second round.

Uploaded by

Tinotenda Dube
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd

Change in income MPC = C

0.6
Increase In Government Expenditure (G) 25 15
First Round 15 9
Second Round 9 5.4

Total 62.5 37.5

MPC Marginal Propensity to Consume (MPC)


MPC Marginal Propensity to Save (MPS)
MPC Marginal Propensity to Import (MPM)
MPC Marginal Propensity to Tax (MPT)
MPS=S MPM =M MPT=T
0.2 0.05 0.15
5 1.25 3.75
3 0.75 2.25
1.8 0.45 1.35

12.5 3.13 9.38

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