The multiplier and the accelerator

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Question 3
Easy

The marginal propensity to withdraw (mpw\text{mpw}mpw) in an economy is 0.4. There is an injection of £160 billion£160\text{ billion}£160 billion into the economy.

What is the final increase in GDP?

£64 billion£64\text{ billion}£64 billion

£240 billion£240\text{ billion}£240 billion

£266.7 billion£266.7\text{ billion}£266.7 billion

£400 billion£400\text{ billion}£400 billion

The multiplier and the accelerator Questions

  1. A Level
  2. /Economics
  3. /The multiplier and the accelerator