If an economy consumes 75 percent of any increase in real GDP and spends 10 percent of this increased income on imports, then a decline in government spending by $60 million will result in a total reduction in equilibrium income of:
A) $171.43 million.
B) $123.47 million.
C) $151.63 million.
D) $73.47 million.
E) $71.43 million.
Correct Answer:
Verified
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