In a Depressed Economy with a MPC of 0

question 89

Multiple Choice

In a depressed economy with a MPC of 0.75, what effect will a $100 increase in government spending have on equilibrium GDP?

• A) It will reduce it by $250.
• B) It will raise it by $250.
• C) It will raise it by $400.
• D) It will raise it by $750.

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