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If the Marginal Propensity to Consume Is 0

Question 51

Multiple Choice

If the marginal propensity to consume is 0.75 and autonomous consumption spending will decrease by $30 billion,by how much would net taxes need to decrease in order to have no change in output? (Ignore any timing issues. )


A) $60 billion
B) $30 billion
C) $90 billion
D) $120 billion
E) $40 billion

Correct Answer:

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