A" consumar who is having a fixed incom and the price of the good are also fixed will attain equilbrium when the spends his money incom on different goods in sch a way that the rations of MU of the last units of the goods purchasased and their prices are equl".
Expenditure multiplier, measur the change in aggregate demand and expenditur.
simple expenditure include is the ratio change in aggregate demand.
Value of tex multiplier;
information to clculate the multiply expentidure is 1/mpc=1-75=25
YD is disposbl incom GDP. wear (GDP) gross domastic production.
Y = C + I + G
C = 25 + 0.8*Yd
Y = 25 + 0.8 * (Y - 100) + 100 + 75
equation Y = C + I + G. You get dY/dG = 1 / (1 - c) where c is the marginal propensity to consume., c = 0.8.
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Mar 26th, 2015
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