Assume that the marginal propensity to consume is 0.9. If the government decreases spending by $50 billion

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Assume that the marginal propensity to consume is 0.9. If the government decreases spending by $50 billion at the same time that it decreases taxes by $50 billion, what would be the maximum impact on aggregate demand?

A decrease of $9 billion

A decrease of $10 billion

A decrease of $50 billion

A decrease of $950 billion

No change.

Related Book For answer-question

Accounting

ISBN: 978-0324662962

23rd Edition

Authors: Jonathan E. Duchac, James M. Reeve, Carl S. Warren

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Posted Date: Nov 16, 2022 06:15 AM

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Assume that the marginal propensity to consume is 0.9. If the government decreases spending by $50 billion

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The net effect of 50 billion decrease in gov... View the full answer

Accounting

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