In a Keynesian Open Economy, Suppose That the MPC =

question 13

Multiple Choice

In a Keynesian open economy, suppose that the MPC = 0.8, the MPM = 0.10, and t = 0.25. If it is desired to increase national income by 125 through an increase in private investment, by how much will private investment have to increase in order to generate the 125 increase in income?

• A) 25
• B) 31.25
• C) 50
• D) 62.5

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