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Consider the simplest macro model with demand-determined output. Suppose an increase in business confidence leads firms to increase investment in new equipment by $100 million.
Consider the simplest macro model with demand-determined output. Suppose an increase in business confidence leads firms to increase investment in new equipment by $100 million. The marginal propensity to spend in this economy is 0.75 What is the increase in expenditure in this economy during the initial first round of spending? $400 million $500 million $100 million $25 million $75 million
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