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If the MPC = 0

Question 14

Multiple Choice

If the MPC = 0.8 and both government purchases and autonomous net taxes fall by $100 billion, by how much does the equilibrium level of real GDP demanded change (assuming neither income taxes nor net exports exist) ?


A) -$100 billion
B) +$100 billion
C) -$500 billion
D) +$500 billion
E) +$200 billion

Correct Answer:

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