Suppose the MPC Is 0

Question 94

Multiple Choice

Suppose the MPC is 0.85.If government purchases increase by $10 billion and net taxes fall by $10 billion,equilibrium output will

A) fall by $10 billion
B) increase by $10 billion
C) increase by $20 billion
D) increase by $66.7 billion
E) increase by $123.3 billion

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