Multiple Choice
The next questions refer to the following simple Keynesian model.
Suppose C = 1000 + .9Y, G = 400, I = 100, (X - IM) = 0, and there are no income taxes.
-If government purchases increase by 100,equilibrium GDP will
A) rise by 25%
B) rise by a factor of 10
C) rise by 90
D) rise by 100
E) rise by 1,000
Correct Answer:
Verified
Correct Answer:
Verified
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