Answered: If the MPC is 0.8 and government…

If the MPC is 0.8 and government spending decreases by $50 million, then equilibrium GDP will decrease by: A) $250 million. B) $40 million. C) $50 million. D) $200 million.

Survey of Economics (MindTap Course List)

9th Edition

ISBN:9781305260948

Author:Irvin B. Tucker

Publisher:Irvin B. Tucker

Chapter15: Fiscal Policy

Section: Chapter Questions

Problem 9SQ

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Question

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If the MPC is 0.8 and government spending decreases by $50 million, then equilibrium GDP will decrease by:
	A)	$250 million.
	B)	$40 million.
	C)	$50 million.
	D)	$200 million.

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