When the MPC is 2/3. If investment spending increases by $2 billion, the GDP will increase by $3 billion.
From the information given, marginal propensity to consume is 2/3 and the investment spending increases by $2 billion.
In this case, the gross domestic product will increase by:
= 2 /(2/3)
= 2 × 3/2
= 3
The GDP will increase by $3 billion.
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