In the Simple Keynesian Model with No Government or Foreign

question 21

Multiple Choice

In the simple Keynesian model with no government or foreign sectors, assume that full employment occurs at an output level of $10,000. With a marginal propensity to consume of 0.5 and equilibrium output at $9,600, by how much will investment spending have to increase to move the economy to full employment?

• A) $50
• B) $100
• C) $200
• D) $400

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