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If the Marginal Propensity to Consume Is 0

Question 3

Multiple Choice

If the marginal propensity to consume is 0.75 and marginal propensity to import is 0.15, then an increase in government spending by 200 will increase GDP by:


A) 200.
B) 800.
C) 500.
D) 400.

Correct Answer:

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