Assume That a GDP Gap Can Be Closed by a $200

question 71

Multiple Choice

Assume that a GDP gap can be closed by a $200 initial change in planned spending.The MPS is 0.3 and the MPI equals 0.1.If the economy is currently in equilibrium with an income level of $600, potential GDP equals:

• A)$1, 600.
• B)$1, 100.
• C)$800.
• D)$600.
• E)$400.

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