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If the Crowding-Out Effect Is Complete and the Marginal Propensity

Question 140

Multiple Choice

If the crowding-out effect is complete and the marginal propensity to save is 0.1, then an increase in government spending of $400 billion will generate how much more real GDP?


A) $0
B) $40 billion
C) $100 billion
D) $400 billion

Correct Answer:

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