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Economics for Today 9th Edition by Irvin Tucker
Edition 9ISBN: 978-1305507111Economics for Today 9th Edition by Irvin Tucker
Edition 9ISBN: 978-1305507111 Exercise 4
Use the aggregate expenditures model and assume an economy is in equilibrium at $5 trillion, which is $250 billion above full-employment GDP. If the marginal propensity to consume (MPC) is 0.60, full-employment GDP can be reached if government spending
A) decreases by $60 billion.
B) decreases by $100 billion.
C) decreases by $250 billion.
D) is held constant.
A) decreases by $60 billion.
B) decreases by $100 billion.
C) decreases by $250 billion.
D) is held constant.
Explanation
Verified
Verified
First, let's plug in the MPC to find the...
Economics for Today 9th Edition by Irvin Tucker
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