(Answered) President bush is successful in passing a 5 billion tax cut

Engineering

President Bush is successful in passing a $5 billion tax cut. Assume that taxes are fixed, the economy is closed, and the marginal propensity to consume is 0.75. What happens to equilibrium GDP?

A) There is a $15 billion increase in equilibrium GDP.

B) There is a $20 billion decrease in equilibrium GDP.

C) There is a $20 billion increase in equilibrium GDP.

D) There is a $15 billion decrease in equilibrium GDP.

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