Respuesta :
Answer:
fall & $0.5 billion
Explanation:
Base on the scenario been described in the question, we can see that for each one percentage point increase in the interest rate, the level of spending investment is declining by $0.5 billion. For this reason it will make the investment spending to fall by $0.5 billion when the interest rate changes as we have seen in the first interest rate calculated.
It should be noted that the change in interest rate will result in a fall in investment spending by $2 billion.
From the complete information that's given, the multiplier will be calculated as:
= 1/(1 - MPC).
where, MPC = 0.5
Therefore, the multiplier will be:
= 1/(1 - MPC)
= 1/(1 - 0.5)
= 1/0.5
= 2
Therefore, it should be noted that the change in interest rate that occurred will lead to a fall in investment spending by $2 billion.
Learn more about investment spending on:
https://brainly.com/question/15465416
