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Assume a Model Where Marginal Propensity to Save Is 0

Question 25

Multiple Choice

Assume a model where marginal propensity to save is 0.2, the marginal propensity to import is 0.1 and the marginal income tax rate is 0.25.What is the size of the expenditure multiplier?


A) 10
B) 5
C) 4
D) 2) 5
E) 2

Correct Answer:

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