Suppose the marginal propensity to consume is 0.75 . If government purchases increase by $100 billion and the extra expenditure is financed with a net tax of $100 billion, by how much will output change?

a. -$400 billion
b. $100 billion
c. $400 billion
d. $0
e. -$100 billion

Economics

You might also like to view...

The exchange rate increases when there is a decrease in the demand for bonds.

a. true b. false

View

Economics

Changes in the value of stocks may play a big role in the consumption decisions of individuals. How would changes in the stock market affect the consumption function?

View

Economics