Suppose that in an economy with lump-sum taxes and no international trade, autonomous investment spending increases by $2 million. If the marginal propensity to consume is 0.75, equilibrium gross domestic product will change by a maximum of
A) $0.5 million
B) $1.5 million
C) $2.0 million
D) $8.0 million
E) $15.0 million
Ans: D) $8.0 million
Economics
You might also like to view...
Time lags
What will be an ideal response?
Economics
Shelby said to her friend, "I just bought a new pair of climbing shoes and I love them so much that I totally would have paid more for them." Shelby was describing the concept of
A) consumer surplus. B) producer surplus. C) equilibrium. D) marginal cost. E) total surplus.
Economics