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Assume That GDP = $10,000 and the MPC = 0

Question 4

Multiple Choice

Assume that GDP = $10,000 and the MPC = 0.75. If policy makers want to increase GDP by 30 percent, and they want to change taxes and government spending by equal amounts, how much would government spending and taxes each need to increase?


A) $300
B) $750
C) $1,000
D) $3,000

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