Multiple Choice
If the marginal propensity to consume is 0.6, the marginal propensity to save is 0.4, and government spending increases by $2 billion at the same time taxes rise by $2 billion, equilibrium income will
A) fall by $2 billion.
B) rise by $2 billion.
C) rise by $5 billion.
D) not change.
Correct Answer:
Verified
Correct Answer:
Verified
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