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Multiplier Effect of Investment Spending
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Multiplier Effect of Investment Spending
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15. Income and Consumption / Multiplier Effect of Investment Spending / Problem 1
Problem 1
If the MPC is 0.85 and the initial investment is \$5 billion, what is the resulting increase in GDP?
A
\$25 billion
B
\$15 billion
C
\$20 billion
D
\$33.33 billion
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