What can we predict about the effect on consumption of an increase in government spending? A) Consumption will increase by an amount equal to the MPC times the change in real GDP. B) Consumption will increase by an amount equal to the MPC times the change in government spending. C) Consumption will increase by the amount of the government spending. D) Consumption will not rise as government spending rise
What can we predict about the effect on consumption of an increase in government spending? A) Consumption will increase by an amount equal to the MPC times the change in real GDP. B) Consumption will increase by an amount equal to the MPC times the change in government spending. C) Consumption will increase by the amount of the government spending. D) Consumption will not rise as government spending rise
Chapter15: Fiscal Policy
Section: Chapter Questions
Problem 6SQP
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What can we predict about the effect on consumption of an increase in government spending? A) Consumption will increase by an amount equal to the MPC times the change in real GDP. B) Consumption will increase by an amount equal to the MPC times the change in government spending. C) Consumption will increase by the amount of the government spending. D) Consumption will not rise as government spending rise
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