Multiple Choice
Consider a model in which output is demand- determined. If the marginal propensity to spend out of national income is 0.4, then a $0.6 billion decrease in government purchases will cause equilibrium national income to by approximately .
A) decrease; $0.24 billion
B) increase; $1.00 billion
C) decrease; $1.50 billion
D) decrease; $1.00 billion
E) increase; $1.50 billion
Correct Answer:
Verified
Correct Answer:
Verified
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