Multiple Choice
In the simple Keynesian model with no government or foreign sectors, assume that the economy is in equilibrium at an output level of $2 billion with a marginal propensity to consume of 0.9. If investment spending decreases by $0.05 billion, what is the new equilibrium output level?
A) $1.5 billion
B) $1.9 billion
C) $1.95 billion
D) $2.5 billion
Correct Answer:
Verified
Correct Answer:
Verified
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