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If the Marginal Propensity to Save (MPS)is 0

Question 117

Multiple Choice

If the marginal propensity to save (MPS) is 0.5 and net exports falls by $100 million, then


A) real Gross Domestic Product (GDP) will increase by $100 million.
B) real Gross Domestic Product (GDP) will fall by $200 million.
C) real Gross Domestic Product (GDP) will not change.
D) the effect on real Gross Domestic Product (GDP) cannot be determined from the given information.

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