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If the Spending Multiplier Is Equal to 4, Then a $25

Question 164

Multiple Choice

If the spending multiplier is equal to 4, then a $25 initial increase in investment spending will lead to a:

A) $25 increase in real GDP.
B) $1 decrease in real GDP.
C) $1 increase in real GDP.
D) $100 decrease in real GDP.
E) $100 increase in real GDP.

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