Multiple Choice
Assume that the economy is at equilibrium at $10 trillion, with a marginal propensity to consume of 0.75. If exports rise by $0.5 trillion and imports increase by $0.7 trillion, equilibrium income will
A) fall by $0.2 trillion.
B) fall by $0.8 trillion.
C) rise by $2 trillion.
D) not change.
Correct Answer:
Verified
Correct Answer:
Verified
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