Answer: a. twice
Explanation:
The impact that government spending will have on GDP is shown by the Multiplier.
Formula is:
= 1 / (1 - MPC)
For the country with an MPC of 0.8:
= 1 / (1 - 0.8)
= 5
For country with MPC of 0.6:
= 1 / (1 - 0.6)
= 2.5
For government spending to be the same, both countries would need a multiple of 5. The only way the second country can get there is by multiplying their MPC by:
= 5 / 2.5
= 2 times
Answer is therefore twice.
The ratio of the whole raise of the income that a consumer spends on purchasing the commodities and services is called marginal propensity to consume (MPC).
The correct answer for the blank is:
Option A. Twice
This can be estimated as:
The multiplier depicts the effect of government spending on GDP.
[tex]= \dfrac {1 }{(1 - \text{MPC})}[/tex]
[tex]= \dfrac {1 }{(1 - 0.8)}[/tex]
= 5
[tex]= \dfrac {1 }{(1 - 0.6)}[/tex]
= 2.5
For the expending by the government to be same both nations should be a multiple of 5.
The MPC of the second country can be determined by:
[tex]= \dfrac{5}{2.5}[/tex]
= 2 times.
Therefore, the government should spend twice.
To learn more about marginal propensity to consume (MPC) follow the link:
https://brainly.com/question/7162964
