If the Marginal Propensity to Consume is 0.8, this means that For each $1 increase in income, residents will increase their consumption by 20 cents. For each $1 increase in government purchase, spending in the economy will increase by $4.00. For each $1 increase in taxes, spending in the economy will decrease by $5.00. For each $1 increase in taxes, spending in the economy will increase by $4.00.
If the Marginal Propensity to Consume is 0.8, this means that For each $1 increase in income, residents will increase their consumption by 20 cents. For each $1 increase in government purchase, spending in the economy will increase by $4.00. For each $1 increase in taxes, spending in the economy will decrease by $5.00. For each $1 increase in taxes, spending in the economy will increase by $4.00.
Chapter15: Fiscal Policy
Section: Chapter Questions
Problem 6SQ
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Question
If the Marginal Propensity to Consume is 0.8, this means that
For each $1 increase in income, residents will increase their consumption by 20 cents.
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For each $1 increase in government purchase, spending in the economy will increase by $4.00.
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For each $1 increase in taxes, spending in the economy will decrease by $5.00.
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For each $1 increase in taxes, spending in the economy will increase by $4.00.
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For each $1 increase in taxes, spending in the economy will decrease by $4.00. |
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