In the Keynesian-Cross Model, If the MPC Equals 0

question 82

Multiple Choice

In the Keynesian-cross model, if the MPC equals 0.75, then a $1 billion decrease in taxes increases planned expenditures by and increases the equilibrium level of income by .

• A)$1 billion; more than $1 billion
• B)$.75 billion; more than $.75 billion
• C)$.75 billion; $.75 billion
• D)$1 billion; $1 billion

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