If Policy Makers Want to Decrease Real GDP by $100

question 1

Multiple Choice

If policy makers want to decrease real GDP by $100 billion and the marginal propensity to consume is 0.6, they should _____ transfer payments by _____ $40 billion.

• A)increase; less than
• B)increase; more than
• C)decrease; less than
• D)decrease; more than

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