Suppose Equilibrium Income in an Economy Decreases by $600 as a Result

question 41

Multiple Choice

Suppose equilibrium income in an economy decreases by $600 as a result of a change in government spending. If the multiplier is 3, what is the change in government spending?

• A) Government spending will decrease by $1,800.
• B) Government spending will decrease by $600.
• C) Government spending will decrease by $200.
• D) Government spending will increase by $400.
• E) Government spending will increase by $1,200.

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