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Income tax system nor imports goods

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Suppose real GDP in the economy has decreased by $25 billion. This economy has neither an income tax system nor imports goods and services. Therefore, by how much must autonomous expenditure have had to change initially in order to cause such a result? Assume a marginal propensity to consume of 0.8.

  1. It must have decreased by $24 billion

  2. It must have increased by $24 billion

  3. It must have decreased by $5 billion

  4. It must have increased by $5 billion

  5. None of the above

Reference no: EM131116710

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