10) If an economy's MPC is 0.8 and the MPM is 0.05, then an increase in government spending of $2,000 will increase income by A) $5,500. B) $8,000. C) $10,000. D) $20,000.
10) If an economy's MPC is 0.8 and the MPM is 0.05, then an increase in government spending of $2,000 will increase income by A) $5,500. B) $8,000. C) $10,000. D) $20,000.
Chapter11: Fiscal Policy
Section: Chapter Questions
Problem 1.7P
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![10) If an economy's MPC is 0.8 and the MPM is 0.05, then an increase in government spending
of $2,000 will increase income by
A) $5,500.
B) $8,000.
C) $10,000.
D) $20,000.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fc24a403d-40ea-42c2-96b5-1bdbec8c79fd%2F96a4b432-1337-4381-8216-dd118ab0cc78%2Fhhvbqxd_processed.jpeg&w=3840&q=75)
Transcribed Image Text:10) If an economy's MPC is 0.8 and the MPM is 0.05, then an increase in government spending
of $2,000 will increase income by
A) $5,500.
B) $8,000.
C) $10,000.
D) $20,000.
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