Business
Business, 26.11.2019 06:31, honestty21

Suppose that marginal propensity to consume is equal to 0.9, and the government increases its spending by $200 billion. this new increase in spending is financed by a fresh increase in taxes equal to $200 billion. as a result of this, gdp will:

a. not change at all.
b. decrease by $200 billion.
c. increase by $2,000 billion.
d. increase by $200 billion.
e. increase by $1,800 billion.

answer
Answers: 2

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