Multiple Choice
Use the aggregate expenditures model and assume an economy is in equilibrium at $5 trillion which is $250 billion below full-employment GDP. If the marginal propensity to consume (MPC) is 0.60, full-employment GDP can be reached if government spending:
A) increases by $60 billion.
B) increases by $100 billion.
C) increases by $250 billion.
D) is held constant.
Correct Answer:
Verified
Correct Answer:
Verified
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