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Assume the Marginal Propensity to Consume Is 0

Question 186

Multiple Choice

Assume the marginal propensity to consume is 0.96. Firms become pessimistic and decrease investment spending by $100 billion. Other things equal, real GDP will:


A) decrease by $100 billion.
B) not change.
C) decrease by $96 billion.
D) decrease by $2,500 billion.

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