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2.4.4 The multiplier

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Question 14

An economy receives an initial fiscal injection of £8.5 billion from a government-funded digital infrastructure project. The marginal propensity to consume (MPC) in this economy is estimated to be 0.6.

Calculate the total final increase in aggregate demand as a result of this policy, assuming no other changes.

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2.4.4 The multiplier Questions

  1. A Level
  2. /Economics
  3. /2.4.4 The multiplier