Assume That the Multiplier Effect for Mexico Is 0

question 108

Multiple Choice

Assume that the multiplier effect for Mexico is 0.85 when U.S.government spending increases.Therefore, a $20 billion decrease in U.S.government spending results in:

• A)a $23.5 billion increase in Mexican real GDP.
• B)a $133.3 billion decrease in Mexican real GDP.
• C)a $3 billion decrease in Mexican real GDP.
• D)a $17 billion decrease in Mexican real GDP.
• E)a $23.5 billion decrease in Mexican real GDP.