Answered: If MPC = 0.5, a simultaneous increase…

If MPC = 0.5, a simultaneous increase in both taxes and government spending of $20 will a. decrease GDP by $20 b. increase GDP by $20 c. decrease GDP by $40 d. increase GDP by $40

Survey of Economics (MindTap Course List)

9th Edition

ISBN:9781305260948

Author:Irvin B. Tucker

Publisher:Irvin B. Tucker

Chapter15: Fiscal Policy

Section: Chapter Questions

Problem 9SQ

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Question

If MPC = 0.5, a simultaneous increase in both taxes and government spending of $20 will

a. decrease GDP by $20

b. increase GDP by $20

c. decrease GDP by $40

d. increase GDP by $40

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