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Suppose the Government Reduces Taxes by $200 Million, That There

Question 39

Multiple Choice

Suppose the government reduces taxes by $200 million, that there is no crowding-out effect, and that the marginal propensity to consume is 0.75.What is the total effect on aggregate demand?


A) $150 million
B) $600 million
C) $267 million
D) $800 million

Correct Answer:

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