If federal government gives a $40 billion tax cut and the marginal propensity to consume is...

 

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If federal government gives a $40 billion tax cut and the marginal propensity to consume is 0.8 What happens to equilibrium GDP? Select one: a. there is a $200 billion decrease in equilibrium GDP. b. there is a $200 billion increase in equilibrium GDP. O C. there is a $160 billion increase in equilibrium GDP O d. there is a $160 billion decrease in equilibrium GDP. If federal government gives a $40 billion tax cut and the marginal propensity to consume is 0.8 What happens to equilibrium GDP? Select one: a. there is a $200 billion decrease in equilibrium GDP. b. there is a $200 billion increase in equilibrium GDP. O C. there is a $160 billion increase in equilibrium GDP O d. there is a $160 billion decrease in equilibrium GDP. If federal government gives a $40 billion tax cut and the marginal propensity to consume is 0.8 What happens to equilibrium GDP? Select one: a. there is a $200 billion decrease in equilibrium GDP. b. there is a $200 billion increase in equilibrium GDP. O C. there is a $160 billion increase in equilibrium GDP O d. there is a $160 billion decrease in equilibrium GDP.

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The multiplier effect can be used to estimate the change in equilibri... View the full answer