If an Economy's Marginal Propensity to Consume Is 0

question 118

Multiple Choice

If an economy's marginal propensity to consume is 0.6 and the marginal propensity to import is 0.1, then an increase in government spending of $1,000 will increase income by:

• A) $2,000.
• B) $1,250.
• C) $2,500.
• D) $1,667.

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