2019 Nov (Multiplier) Paper 3 HL

 2019 Nov (Multiplier) Paper 3 HL

If the MPC is .75 then the MPS = .25 the Multiplier Formula = 1/MPS

 

1/ .25 = 4, The Multiplier is 4

 

Investment increased by 11 million x 4 = 44m increase in RGDP

Government Spending decreased by 8 million x 4 = 32m decrease in RGDP

 

Therefore RGDP actually increased by 44 – 32 = 12m gamma