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Suppose Government Purchases Increase by $100 Billion, That There Is

Question 9

Multiple Choice

Suppose government purchases increase by $100 billion, that there is no crowding-out effect, and that the marginal propensity to consume is 0.9.What is the total effect of this increase in government purchases?


A) $90 billion
B) $111 billion
C) $900 billion
D) $1000 billion

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