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The Equilibrium Level of Real GDP Is $1,000, the Target

Question 27

Multiple Choice

The equilibrium level of real GDP is $1,000, the target full-employment level of real GDP is $1,500, and the marginal propensity to consume is 0.75. The target can be reached if government spending is:


A) increased by $100 billion.
B) increased by $125 billion.
C) increased by $500 billion.
D) held constant.

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