Suppose the MPC is 0.85 . If government purchases increase by $10 billion and net taxes fall by $10 billion, equilibrium output will
a. fall by $10 billion
b. increase by $10 billion
c. increase by $20 billion
d. increase by $66.7 billion
e. increase by $123.3 billion
E
Economics
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If equilibrium income is $500 billion, MPC = 0.8, MPI = 0.2 and autonomous government spending increases by $20 billion, the new equilibrium income will be _____
a. $600 billion b. $550 billion c. $525 billion d. $520 billion e. $500 billion
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What is normal profit? How is it different from accounting profit?
Economics