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Question: suppose that there are two countries in the world economy...

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Suppose that there are two countries in the world economy countries A and B. The countries possess the following marginal propensities MPC (A) = 0.7, MPM (A) = 0.1, MPC (B) = 0.8, MPM (B) = 0.2. There is no government sector. using the formula for the open economy multiplier with foreign repercussions calculate the effect on country A's income of rise n autonomous investment in country A of $35 billion. ( note: to answer this question, you need to read Appendix B of this chapter)

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