The final increase in the output, given the increase in government expenditure and the simple spending multiplier, is $ 1 , 000.
When given the amount that government expenditure changes by, you can find the final increase in output by multiplying this increase government expenditure by the spending multiplier.
The final increase in output for this economy is:
= Increase in government expenditure x Simple spending multiplier
= 200 x 5
= $ 1 , 000
In conclusion, the final output in the economy increased by $1, 000.
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