Multiple Choice
Assume in a private closed economy that the equilibrium level of income is $380 and the MPS is .25.Now suppose government collects taxes of $50 and spends the entire amount.As a result:
A) the equilibrium level of real income and the price level will both remain unchanged.
B) the equilibrium level of income will remain unchanged.
C) the equilibrium level of income will rise to $420.
D) the equilibrium level of income will rise to $430.
Correct Answer:
Verified
Correct Answer:
Verified
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