Suppose that John Maestro, the owner of a tennis shop in Evanston, Illinois, decides to purchase a new machine that restrings tennis rackets in half the time it formerly took. The new technology costs $1,000, and the MPC is 0.80. How much real GDP will be generated from John's $1,000 initial investment?
A) $200
B) $500
C) $1,000
D) $2,000
E) $5,000
Correct Answer:
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