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Business, 03.07.2020 21:01 graciemartinez9
Suppose economists observe that an increase in government spending of $15 billion raises the total demand for goods and services by $60 billion. If these economists ignore the possibility of crowding out, they would estimate the marginal propensity to consume (MPC) to be .
a. 1/4
b. 3/4
c. 1/4
d. 4
Now suppose the economists allow for crowding out. Would their new estimate of the MPC be larger or smaller than their initial one?
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