Multiple Choice
Suppose the economy's multiplier is 2. Other things equal, a $25 billion decrease in government expenditures on national defense will cause equilibrium GDP to
A) decrease by $50 billion.
B) decrease by $150 billion.
C) remain unchanged since spending on military goods is unproductive and usually wasteful.
D) decrease by $25 billion.
Correct Answer:
Verified
Correct Answer:
Verified
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