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If Lump-Sum Taxes Are Decreased by $10 Billion and the Equilibrium

Question 152

Multiple Choice

If lump-sum taxes are decreased by $10 billion and the equilibrium GDP increases by $40 billion as a result, we can conclude that:

A) the expenditures multiplier is 4.
B) the MPC for this economy is .8.
C) the MPC for this economy is .6.
D) the expenditures multiplier is 3.

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