Multiple Choice
If the MPC is 0.6 and if government purchases and net taxes both increase by $20 billion,by how much will equilibrium output change?
A) It will increase by $80 billion.
B) It will increase by $20 billion.
C) It will not change because the changes in government purchases and net taxes will cancel each other out.
D) It will decrease by $20 billion.
E) It will decrease by $80 billion.
Correct Answer:
Verified
Correct Answer:
Verified
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