Multiple Choice Question (1 Viewer)

Nasonex

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Other things being equal, what increase in investment is required to produce a $400m increase in national income in an economy with a MPS of 0.2?

a) $80m
b) $320m
c) $400m
d) $2000m

also plz show working to help

Cheers:)
 
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Multiplier is 1/MPS, so 1/0.2 = 5.

x*5 = 400
x = 80

i.e. a) $80m
 

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