Question

When the economy is in a recession, the government will want to increase output. If the multiplier equals 2.7 and the government increases spending by 145, how much will output increase by?

Answer 1

the increase in the output is 391.50

Step-by-step explanation:

The computation of the increase in the output is shown below:

Given that

The Multiplier is 2.7

And, there is an increase in government spending by 145

So, the output would increased by

= Multiplier × increase in government spending

= 2.7 × 145

= 391.50

Hence, the increase in the output is 391.50

We simply applied the above formula so that the correct value could come

And, the same is to be considered