If the MPC Is

question 174

Multiple Choice

If the MPC is.50, all taxes are lump-sum taxes, and the equilibrium GDP is $40 billion below the full-employment GDP, then the size of the recessionary expenditure gap:

• A)is $40 billion.
• B)is $20 billion.
• C)is $60 billion.
• D)cannot be determined from the information given.

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