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If Autonomous Spending Increases by $500 Billion And, as a Result

Question 190

Multiple Choice

If autonomous spending increases by $500 billion and, as a result, equilibrium real GDP increases by $2 trillion, then we know that the

A) MPC is greater than 1.
B) expenditure multiplier is 0.25.
C) expenditure multiplier is 4.0.
D) MPC equals 1.
E) expenditure multiplier is 2.0.

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