In the simple Keynesian model, if the equilibrium level of income is $
In the simple Keynesian model, if the equilibrium level of income is $300 billion, the MPC is 0.75, and government expenditures increase by 20 billion. What is the new equilibrium level of income?
a. $320 billion
b. $380 billion
c. $220 billion
d. $520 billion
ANSWER
B
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