If a $50 billion decrease in investment spending causes income to decline by $50 billion in the first round of the multiplier process and by $25 in the second round, the multiplier in the economy is $400 billion.
A right shift of the investment demand curve is caused by a(n). This is an increase in the expected return on investment due to increased confidence in the company. The marginal propensity to consume (MPC) is the change in consumption divided by the change in personal disposable income.
The spending multiplier shows how changes in autonomous spending affect the economy's aggregate spending and aggregate demand. To find the spending multiplier, divide the net change in real GDP by the change in autonomous spending.
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