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An Increase in Spending of $25 Billion Increases Real GDP

Question 163

Multiple Choice

An increase in spending of $25 billion increases real GDP from $600 billion to $700 billion.The marginal propensity to consume must be

A) 0.25, and the multiplier is 4.
B) 0.50, and the multiplier is 2.
C) 0.75, and the multiplier is 4.
D) 0.80, and the multiplier is 5.

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