Imagine an economy that does not have international trade and is initially in equilibrium. Later the government increases the level of spending by $350 million because it received a gift from abroad. In this economy, only 65 cents of every dollar is spent, and the rest is saved. The new equilibrium level of GDP for the economy will be higher by approximately:
a. $1 billion.
b. $350 million.
c. $65 million.
d. $227.5 million.
e. $227.5 million.
a
Economics
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