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natta225 [31]
3 years ago
8

In a neoclassical economy, assume that the government lowers both government spending and taxes by $100 billion. If the marginal

propensity to consume is 0.6, investment will: Group of answer choices rise by $100 billion. not change. rise by $40 billion. rise by $60 billion.
Business
1 answer:
Zigmanuir [339]3 years ago
3 0

Answer:

rise by $40 billion

Explanation:

Calculation to determine what the investment will be

Investment=$100 billion*(100%-60%)

=$100 billion*40%

=$40 billion

Therefore the investment will rise by $40 billion

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