Multiple Choice
If the marginal propensity to consume (MPC) is 0.75 and government purchases increase by $200 billion, then
A) equilibrium real Gross Domestic Product (GDP) will increase by $800 billion.
B) equilibrium real Gross Domestic Product (GDP) will increase by $200 billion.
C) equilibrium real Gross Domestic Product (GDP) will increase by $50 billion.
D) the effect on equilibrium real Gross Domestic Product (GDP) cannot be determined from the given information.
Correct Answer:
Verified
Correct Answer:
Verified
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