If the mpc is 0.70 and investment increases by $3 billion, the equilibrium gdp will

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Business

Cesar Mcmillan

16 August, 03:04

If the mpc is 0.70 and investment increases by $3 billion, the equilibrium gdp will

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Alena Buckley · Answer 1

If the MPC is 0.70 and investment increases by $3 billion, the equilibrium GDP will increase by $10 billion.

The GDP is the Gross Domestic Product and the MPC is the marginal propensity to consume. The MPC tracks that a raise in pay will increase consumers spending on goods and services. If there is an increase in spending budget, then the GDP will increase because of more spending power.