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Business, 30.05.2020 23:04 veheca

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

1/4

3/4

1/4

4

Now suppose the economists allow for crowding out. Their new estimate of the MPC would be larger or smaller than their initial one

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