In the Keynesian aggregate-expenditure model, if the MPC is 0.75 and gross investment increases by $6 billion, equilibrium GDP will increase by
(A) $6 billion.
(B) $8 billion.
(C) $12 billion.
(D) $24 billion.
(E) $42 billion.
Answer: D
In the Keynesian aggregate-expenditure model, if the MPC is 0.75 and gross investment increases by $6 billion, equilibrium GDP will increase by
(A) $6 billion.
(B) $8 billion.
(C) $12 billion.
(D) $24 billion.
(E) $42 billion.
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