By how much will GDP change if firms decrease their investment by $-8 billion and the MPC is 0.9? If the MPC is 0.8?

Change in GDP with MPC of 0.9 = $ billion
Change in GDP with MPC of 0.8 = $ billion (Instructions: round this answer to the closest billion. For example, 82,282,282,282 would be rounded to 82 billion.)

I've been really confused on how MPC and MPS work with investment. If you can show the formulas and steps, that would be great. Thank you!

Question

By how much will GDP change if firms decrease their investment by $-8 billion and the MPC is 0.9?  If the MPC is 0.8?

Change in GDP with MPC of 0.9 = $ billion
Change in GDP with MPC of 0.8 = $ billion (Instructions: round this answer to the closest billion. For example, 82,282,282,282 would be rounded to 82 billion.)

I've been really confused on how MPC and MPS work with investment. If you can show the formulas and steps, that would be great. Thank you!

anonymous · Answer

There was also this question that I would like to know how to solve:

Suppose that a certain country has an MPC of 0.9 and real GDP of $400 billion.  If its investment spending increases by $9 billion, what will be its new level of real GDP?