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If Government Increases Lump-Sum Taxes by $20 Billion and the Economy's

Question 161

Multiple Choice

If government increases lump-sum taxes by $20 billion and the economy's MPC is .6, then the:


A) consumption schedule will shift upward by $12 billion.
B) consumption schedule will shift downward by $12 billion.
C) equilibrium GDP will increase by $40 billion.
D) equilibrium GDP will decrease by $12 billion.

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