(Answered) Suppose real gdp in the economy has decreased by 25 billion

Management Studies

Suppose real GDP in the economy has decreased by $25 billion. This economy has neither an income tax system nor imports goods and services. Therefore, by how much must autonomous expenditure have had to change initially in order to cause such a result? Assume a marginal propensity to consume of 0.8.

It must have decreased by $24 billion
It must have increased by $24 billion
It must have decreased by $5 billion
It must have increased by $5 billion
None of the above

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