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A $100 Billion Increase in Government Purchases Would

Question 105

Multiple Choice

A $100 billion increase in government purchases would:


A) ​increase AD by $500 billion if MPC = 0.8.
B) ​decrease AD by $300 billion if MPC = 2/3.
C) ​decrease AD by $200 billion if MPC = 0.9.
D) ​decrease AD by $40 billion if MPC = 0.4.

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