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If a $10 Billion Decrease in Lump-Sum Taxes Increases Equilibrium

Question 54

Multiple Choice

If a $10 billion decrease in lump-sum taxes increases equilibrium GDP by $40 billion,then:

A) the multiplier is 4.
B) the MPC for this economy is .8.
C) the MPC for this economy is .6.
D) the multiplier is 3.

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