Solved

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

Question 13

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. If the government increases spending by $10 billion, real GDP will increase by:


A) $10 billion.
B) $20 billion.
C) $27.8 billion.
D) $50 billion.

Correct Answer:

verifed

Verified

Unlock this answer now
Get Access to more Verified Answers free of charge

Related Questions

Q9: Holding everything else constant, the multiplier effect

Q10: Public debt is government debt held by

Q12: Expansionary fiscal policy:<br>A) increases long-run aggregate supply.<br>B)

Q14: For a marginal propensity to consume of

Q15: Suppose that real GDP is $1,500, potential

Q16: Funding for Social Security and Medicare:<br>A)must come

Q17: Expansionary fiscal policies:<br>A)make the budget surplus smaller.<br>B)make

Q18: Use the following to answer questions:<br>Figure: Fiscal

Q46: Contractionary fiscal policy includes:<br>A) decreasing taxes.<br>B) decreasing

Q57: President Johnson's use of a temporary 10%