Assume in a Private Economy That the Equilibrium Level of Income

Multiple Choice

Assume in a private economy that the equilibrium level of income is $380 and the MPS is 0.25.Now suppose government collects taxes of $50 and spends the entire amount.As a result:

A) the equilibrium level of real income and the price level will both remain unchanged.
B) nominal wage rates will fall.
C) the equilibrium level of income will rise to $420.
D) the equilibrium level of income will rise to $430.