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Business, 05.05.2020 11:35 AWFHayami

As an elected official, you have been informed that real GDP is below its potential and that action should be taken to encourage economic growth and bring the economy to its long-run equilibrium. The marginal propensity to consume is 0.8, and the amount of new government spending is $700 billion.

What is the multiplier? Compute this to the first place beyond the decimal.
By how much would the economy be stimulated?

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