Solved

Suppose Government Spending Decreases by $100 Billion and the Marginal

Question 305

Multiple Choice

Suppose government spending decreases by $100 billion and the marginal propensity to consume (MPC) is 0.8. Given this information, this decrease in government spending will cause a(n)


A) increase in equilibrium real GDP equal to $500 billion.
B) increase in equilibrium real GDP equal to $800 billion.
C) decrease in equilibrium real GDP equal to $500 billion.
D) decrease in equilibrium real GDP equal to $800 billion.

Correct Answer:

verifed

Verified

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

Related Questions

Q154: <img src="https://d2lvgg3v3hfg70.cloudfront.net/TB5018/.jpg" alt=" -Refer to the

Q175: Which of the following would increase the

Q178: Investment includes spending on<br>A) capital goods, buildings,

Q200: <img src="https://d2lvgg3v3hfg70.cloudfront.net/TB5018/.jpg" alt=" -Refer to the

Q301: If the average propensity to save (APS)is

Q306: It is conceivable that the APC, APS,

Q307: What would happen to the planned investment

Q308: The consumption function will shift with<br>A)an increase

Q309: <img src="https://d2lvgg3v3hfg70.cloudfront.net/TB5016/.jpg" alt=" -Refer to the

Q422: <img src="https://d2lvgg3v3hfg70.cloudfront.net/TB5018/.jpg" alt=" -In the above