Answer:
increase the aggregate expenditure to $15 billion ($40-$25)
to achieve full employment.
Explanation:
Note:
If change in aggregate expenditures is equal to change in aggregate income then MPC=1.
Formula for MPC:
MPC=Change in Consumption or expenditure/ Change in Income
Given MPC=0.62
0.625=Change in Consumption or expenditure/ (240-200)
Change in Consumption or expenditure=[tex]0.625 * 40\\[/tex]
Change in Consumption or expenditure=$ 25 billion
Since the change in income is $40 billion($240-$200) and Change in aggregate expenditure we calculated above is $25 billion so we need to increase the aggregate expenditure to $15 billion ($40-$25)
to achieve full employment i.e to make MPC to 1.
