Estimate the marginal propensity to consume

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Suppose economists observe that an increase in government spending of $10 billion raises the total demand for goods and services by $30 billion.

If these economists ignore the possibility of crowding out, they would estimate the marginal propensity to consume (MPC) to be_____ .

Now suppose the economists allow for crowding out.

Their new estimate of the MPC would be______ than their initial one. (fill in the blanks).

Reference no: EM13773952

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