xoAmber7009 xoAmber7009
  • 27-10-2017
  • Business
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Assume the mpc is 2/3. if government spending decreases by $6 billion, equilibrium gdp will:

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Louli
Louli Louli
  • 27-10-2017
To calculate the decrease in the GPD, we will have to multiply the decline in the government's spending by the multiplier.

Since the MPC is 2/3, therefore, the multiplier in this case is 3.

Therefore:
if government spending decreases by $6 billion, equilibrium gdp will decrease by 3*$6 billion = $18 billion
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