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# Part 1 solution

Part A:

a. Government spending multiplier when MPC =0.5 and MPC = 0.7.

If MPC = 0.5

And government spending = 1/1-MPC

=1/1-0.5 =2

If MPC = 0.7

And government spending = 1/1-MPC

=1/1-0.7 = 3.3

b. Tax multiplier when MPC =0.7.

Where tax multiplier

= -MPC/1-MPC

=-0.7/1-0.7 = -2.3

c. Marginal propensity to save (MPS) of this economy when MPC =0.5 and MPC

= 0.7

When MPC = 0.5

MPS = 1-MPC

=1-0.5 = 0.5

When MPC = 0.7

=1-0.7 =0.3

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### Replies to This Discussion

thank you so much jazzaqAllah

plz question no.2 b post kr dain

JazkAllah :)

ACCORDING TO MY POINT.... HOW CAN U GET THE ANSWER OF (A & B).... MAIN NE CALCULATION KI HAI PER WO JO ANSWER AP NE DIE HWAY HAIN WO A NAI RAHAY AGR HUM 1/1-0.5 KARAIN TU HAMARY PAS ANSWER 0.5 HI AYE GA OR AISI TRHA 0.7 K SATH KARAIN TU HAMARY PAS ANS 0.3 AI GA TU APK YE ANSWERS KAISE A GAYE......

PLZZZZZZ DO EXPLAIN ME?????

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