real gdp

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real gdp

ahlashi
governtment purchases rises by 100$ and MPC=.80
ASSUMING IDLE RESOURCES EXIST AT each ependiture round and the multiplier is operative.
Change in real GDP equals ?

ANS ; 500$

 i am not getting the correct answer pls help
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Re: real gdp

Dr. Strange
Y = C + G + cY
Y= (C+G)/(1-c)
dY = dG/(1-c)
 c= 0.8, dG=100 so dY =500