If the Marginal Propensity to Consume (MPC) Is 0

question 5

Multiple Choice

If the marginal propensity to consume (MPC) is 0.75, a $50 decrease in government spending, other things being equal, would cause equilibrium real GDP to:

• A) increase by $50.
• B) decrease by $50.
• C) increase by $200.
• D) decrease by $200.

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