Multiple Choice
In the simple Keynesian model with no government or foreign sectors, suppose that the economy is in equilibrium at an output level of $10 trillion with a marginal propensity to consume of 0.8. If investment spending increases by $0.5 trillion, what is the new equilibrium output level?
A) $10.5 trillion
B) $10.8 trillion
C) $12 trillion
D) $12.5 trillion
Correct Answer:
Verified
Correct Answer:
Verified
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