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Real GDP Equals $400 Billion, the Government Collects 25% of Any

Question 270

Multiple Choice

Real GDP equals $400 billion, the government collects 25% 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 multiplier?


A) 1
B) 2.5
C) 4
D) 5

Correct Answer:

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