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QUESTION
Economists think that the marginal propensity to consume for the Australia economy is between 0.9 and 0.
Economists think that the marginal propensity to consume for the Australia economy is between 0.9 and 0.95. Based on our simple multiplier formula, this would imply that the multiplier for Australia should be at least 10. However, many economists agree that the spending multiplier is close to 2.0.What might explain this supposed anomaly?
