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In an Economy That Has No Leakages Except Savings, the Government

Question 5

Multiple Choice

In an economy that has no leakages except savings, the government injects $200 of new spending into the economy, and the total spending in the economy increases by $400. The marginal propensity to consume is:


A) 0.7.
B) 0.5.
C) 0.3.
D) 0.1.

Correct Answer:

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