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Real GDP Equals $200 Billion, the Government Collects 20% of Any

Question 382

Multiple Choice

Real GDP equals $200 billion, the government collects 20% of any increase in real GDP in the form of taxes, and the marginal propensity to consume is 0.8. What is the value of the expenditure multiplier?


A) 1
B) 2
C) 2.8
D) 5

Correct Answer:

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