The Income Expenditure Model Predicts That If the Marginal Propensity

question 149

Multiple Choice

The income expenditure model predicts that if the marginal propensity to consume is 0.75 and the federal government increases spending by $100 billion, real GDP will increase by:

• A)$100 billion.
• B)$750 billion.
• C)$400 billion.
• D)$300 billion.

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