Multiple Choice
According to the balanced budget multiplier, an increase in government spending of $10,000 that is financed by an increase of $10,000 in taxes will have what effect on the economy when MPC is 0.80?
A) Income will not change.
B) Income will increase by $8,000.
C) Income will increase by $10,000.
D) Income will increase by $50,000.
Correct Answer:
Verified
Correct Answer:
Verified
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