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If the Marginal Propensity to Consume Is 0

Question 192

Multiple Choice

If the marginal propensity to consume is 0.75 and investment spending decreases by $20 billion,what will be the overall effect on GDP?


A) GDP will decrease by $20 billion
B) GDP will increase by $15 billion
C) GDP will decrease by $80 billion
D) GDP will decrease by $30 billion
E) GDP will decrease by $26.7 billion

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