Multiple Choice
Assume that the MPC is 0.75. If government spending increases by $400, equilibrium output ________; and if taxes increase by $400, equilibrium output ________.
A) increases by $1,600; decreases by $1,600
B) increases by $1,600; decreases by $1,200
C) increases by $1,200; decreases by $1,600
D) increases by $400; decreases by $400
Correct Answer:
Verified
Correct Answer:
Verified
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