In an open economy, the marginal propensity to save is 0.08, the marginal propensity to tax is 0.12, and the marginal propensity to import is 0.05. The government plans to increase public infrastructure spending by £48 billion£48\text{ billion}£48 billion, while private sector business investment is forecast to fall by £12 billion£12\text{ billion}£12 billion over the same period.
What is the expected final change in National Income?
£27 billion£27\text{ billion}£27 billion
£144 billion£144\text{ billion}£144 billion
£192 billion£192\text{ billion}£192 billion
£240 billion£240\text{ billion}£240 billion
22 exam-style questions on OCR A Level Economics The multiplier and the accelerator. Each one has a worked solution and a mark scheme showing where the marks go.