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Additional consumption-consumption expenditures

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Reference no: EM132265807

Assume the marginal propensity to consume (MPC) is 0.8 and there is a $200 billion increase in government purchases in an economy, other things constant. In the first round of induced additional consumption, consumption expenditures will increase by:

  • $800 billion.
  • $80 billion.
  • $160 billion.
  • $280 billion.
  • $200 billion.

Reference no: EM132265807

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