Suppose that the economy's marginal propensity to consume is 0.75. Assuming that prices are constant, a $175 million decrease in government purchases of goods and services would decrease equilibrium real GDP by
A) $500 million
B) $600 million
C) $700 million
D) $800 million

Question

Quizplus · Accepted Answer

The Answer of Suppose that the economy's marginal propensity to consume is 0.75. Assuming that prices are constant, a $175 million decrease in government purchases of goods and services would decrease equilibrium real GDP by
A) $500 million
B) $600 million
C) $700 million
D) $800 million

Suppose That the Economy's Marginal Propensity to Consume Is 0