Multiple Choice
In a neoclassical economy, assume that the government lowers both government spending and taxes by $100 billion. If the marginal propensity to consume is 0.6, investment:
A) rises by $100 billion.
B) rises by $60 billion.
C) rises by $40 billion.
D) will not change.
Correct Answer:
Verified
Correct Answer:
Verified
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