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Chapter 12: Q. 89 (page 825)

Refer to Problem 89. Suppose that the marginal

propensity to consume throughout the U.S. economy is 0.95.\ What is the multiplier for the U.S. economy?

Short Answer

Expert verified

The multiplier is 20 in U.S. Economy

Step by step solution

01

Given information

We are givena1=1,r=0.95,an=ran-1

02

Calculate

We use the formula S=a11-r

We get,

S=11-0.95S=20

03

Conclusion

The multiplier is 20 in U.S. Economy

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