Consider a model in which output is demand-determined.If the marginal propensity to spend out of national income is 0.4,then a $0.6 billion decrease in government purchases will cause equilibrium national income to ________ by approximately ________.
A) decrease; $1.50 billion
B) decrease; $1.00 billion
C) decrease; $0.24 billion
D) increase; $1.00 billion
E) increase; $1.50 billion
Correct Answer:
Verified
Q101: Consider a simple macro model with government
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