Suppose equilibrium income in an economy decreases by $600 as a result of a change in government spending. If the multiplier is 3, what is the change in government spending?
A) Government spending will decrease by $1,800.
B) Government spending will decrease by $600.
C) Government spending will decrease by $200.
D) Government spending will increase by $400.
E) Government spending will increase by $1,200.
Correct Answer:
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