Suppose the MPC Is 0

question 94

Multiple Choice

Suppose the MPC is 0.85.If government purchases increase by $10 billion and net taxes fall by $10 billion,equilibrium output will

• A) fall by $10 billion
• B) increase by $10 billion
• C) increase by $20 billion
• D) increase by $66.7 billion
• E) increase by $123.3 billion

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