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Rina8888 [55]
2 years ago
6

In a closed economy with only lump-sum taxation, if the marginal propensity to consume is equal to 0. 75, a $70 billion increase

in government spending could cause a maximum increase in output of.
Business
1 answer:
Ber [7]2 years ago
7 0

The maximum increase in output would be $280 billion.

<h3>What is the maximum increase in output?</h3>

The MPC is known as the marginal propensity to consume. It is the fraction of income that is spent on consumption. The other fraction of income is expected to be saved.

The maximum increase in output = increase in government spending / ( 1 - MPC)

$70 / 0.25 = $280 billion

To learn more about marginal propensity to consume, please check: brainly.com/question/10710567

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3 years ago
Suppose selected comparative statement data for the giant bookseller Barnes &amp; Noble are presented here. All balance sheet da
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3 years ago
Mortar Corporation acquired 80 percent of Granite Corporation's voting common stock on January 1, 20X7. On December 31, 20X8, Mo
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The quantity theory of money is a theory of how A) the money supply is determined. B) interest rates are determined. C) the nomi
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The quantity theory of money is obtained from the equation of exchange which is:

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Dividing both sides by velocity gives,

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I hope my answer helps.

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