Macmillan LearningWhat is the eventual effect on real GDP if the governmentincreases its purchases of goods and services by $60,000?Assume the marginal propensity to consume (MPC) is 0.75.What is the eventual effect on real GDP if the government,instead of changing its spending, increases transfers by$60,000? Assume the MPC has not changed.An increase in government transfers or taxes, as opposedto an increase in government purchases of goods andservices, will result inO no change to real GDP.O a smaller eventual effect on real GDP.a larger eventual effect on real GDP.O an identical eventual effect on real GDP.

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ENGR.ECONOMIC ANALYSIS

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Chapter1: Making Economics Decisions

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Question

Macmillan Learning
What is the eventual effect on real GDP if the government
increases its purchases of goods and services by $60,000?
Assume the marginal propensity to consume (MPC) is 0.75.
What is the eventual effect on real GDP if the government,
instead of changing its spending, increases transfers by
$60,000? Assume the MPC has not changed.
An increase in government transfers or taxes, as opposed
to an increase in government purchases of goods and
services, will result in
O no change to real GDP.
O a smaller eventual effect on real GDP.
a larger eventual effect on real GDP.
O an identical eventual effect on real GDP.

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