Multiplier and crowding-out effects Macroeconomics Aggregate Demand Multiplier and crowding-out effects Questions Why is the crowding-out effect important? What is the Keynesian multiplier? If the Marginal Propensity to consume (MPC) is .9, what would be the change in GDP from an investment expenditure increase of $500 be? If the marginal propensity to consume is 0.9 in a closed economy, what would be the effect on GDP of a $20 billion decline in investment spending? Does the slope of the aggregate expenditures curve in the Keynesian model equal the marginal propensity to consume? How does the marginal propensity to consume relate to the Keynesian multiplier? If the marginal propensity to consume is .9, then what is the marginal propensity to save? What is the mathematical formula for the marginal propensity to consume? How does the Keynesian multiplier relate to the marginal propensity to consume? How does the Keynesian multiplier relate to the marginal propensity to save? Aggregate Demand View all chapters Determinants of aggregate demand Multiplier and crowding-out effects Prev