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

question 49

Multiple Choice

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

• A) $1 billion; more than $1 billion
• B) $0.75 billion; more than $0.75 billion
• C) $0.75 billion; $0.75 billion
• D) $1 billion; $1 billion

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