In a depressed economy with an MPC of 0.20, what effect will a $200 increase in government spending have on equilibrium GDP? It will raise it by $1,000. It will reduce it by $150. It will raise it by $500. It will raise it by $250.
In a depressed economy with an MPC of 0.20, what effect will a $200 increase in government spending have on equilibrium GDP? It will raise it by $1,000. It will reduce it by $150. It will raise it by $500. It will raise it by $250.
Chapter11: Fiscal Policy
Section: Chapter Questions
Problem 6SQP
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Transcribed Image Text:In a depressed economy with an MPC of 0.20, what effect will a $200 increase in government spending have on
equilibrium GDP?
It will raise it by $1,000.
It will reduce it by $150.
It will raise it by $500.
It will raise it by $250.
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