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Equilibrium Real GDP Is $500 Billion, Government Expenditures Are $80

Question 97

Multiple Choice

Equilibrium real GDP is $500 billion, government expenditures are $80 billion, the MPC = 0.9, and there are no income taxes or imports. Suppose that government expenditures increase to $100 billion. If the price level is constant, after the increase in government expenditures, equilibrium real GDP will be


A) $520 billion.
B) $580 billion.
C) $600 billion.
D) $700 billion.

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