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If Policy Makers Want to Decrease Real GDP by $100

Question 1

Multiple Choice

If policy makers want to decrease real GDP by $100 billion and the marginal propensity to consume is 0.6, they should _____ transfer payments by _____ $40 billion.


A) increase; less than
B) increase; more than
C) decrease; less than
D) decrease; more than

Correct Answer:

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