The fiscal multiplier for government spending is 2.1, and the multiplier for taxes is -1.7. The government increases its purchases by $7 million. After the multiplier effect, GDP will:
A) rise by $14.7 million.
B) rise by $11.9 million.
C) fall by $26.6 million.
D) fall by $2.8 million.
Correct Answer:
Verified
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