Ca inter fm eco Feb exam question
Please can say what's the answer of this question
Govt. Exp is up by 6 billions This means, there is increase in income by 6 billions. Multiplier (m) = 1 / (1- MPC) = 1 / (1- 0.8 ) = 5 Also, m = Change in C / change in Y Change in C = 5 x 6 billions = 11 billions Therefore, GDP will increase by 11 billions.