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In the simple keynesian model with no government and


In the simple Keynesian model with no government and foreign sectors, suppose that initially the economy is in equilibrium at an output of $10 trillion with a marginal propensity to consume of 0.8. If investment spending increases by $0.5 trillion, what is the new equilibrium output level?

  • $10.5 trillion
  • $12.5 trillion
  • $12.0 trillion
  • $10.8 trillion

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Business Management: In the simple keynesian model with no government and
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