According to table 11 on the data you got on discussion about GDP; government expenditure in Saudi Arabia increased from 537,154,659,558 SAR on 2019 to 559,740,919,125 SAR on 2020, Assume Marginal Propensity to Consume is 0.80 (some studies show that MPC in Saudi Arabia is between 0.7 to 0.95). Calculate:
- Multiplier effect.
- Increase in GDP due to increase on government expenditure from 2019 to 2020.
How does your answer on part b will be if there is crowding out effect?
