If the Economy Is Initially Suffering from a Recessionary Gap

question 32

Multiple Choice

If the economy is initially suffering from a recessionary gap equal to 100 units and the marginal propensity to consume is 0.75,then the income-expenditure multiplier is equal to _______,so if net exports rise by _______ units,the economy will return to potential output.

• A) 0.75;133
• B) 4;250
• C) 4;25
• D) 5;200
• E) 5;20

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