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National income identity: Y=C+I+G
Consumption function: C=0.8Y
Investment: I=10
Government expenditure: G=30
What is the value of the fiscal multiplier??
Google and notes gives me:
C=a+bY
and
fiscal multiplier = 1/(1-b)
????
Grr what would be the value of the fiscal multiplier in above case??
Sorry, but everyone else is drunk, urgent essay due in on monday and Im working all day tomorrow...
Any help / ideas greatly appreciated.
After some maths manipulation it turns out:
Fiscal multiplier = Change in GDP (Y) / Change in government spending (G)
There!! it can sink in peace now :P
National income identity: Y=C+I+G
Consumption function: C=0.8Y
Investment: I=10
Government expenditure: G=30
What is the value of the fiscal multiplier??
Google and notes gives me:
C=a+bY
and
fiscal multiplier = 1/(1-b)
????
Grr what would be the value of the fiscal multiplier in above case??
Sorry, but everyone else is drunk, urgent essay due in on monday and Im working all day tomorrow...
Any help / ideas greatly appreciated.