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Suppose the Marginal Propensity to Consume Is 0

Question 84

Multiple Choice

Suppose the marginal propensity to consume is 0.80 and equilibrium GDP resulting from a change in investment spending falls by -$500 billion.What must have been the initial change in investment spending


A) $100 billion
B) -$100 billion
C) $500 billion
D) -$500 billion
E) -$400 billion

Correct Answer:

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