Calculation of Multiplier and change in investment in a closed economy.
In a closed economy without a government sector, consumption is determined as 80% of the income available to households. Investment is autonomous at a level of £450.
A. Compute the value of the multiplier, given the change in investment.
B. describe, as if you were describeing to your (non-economist) grandparents what is the meaning of that multiplier you found in c).