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If the MPC is .75, a $10 billion increase in imports will: A. Increase GDP by $40 billion, B. Decrease GDP by $40 billion, C.
If the MPC is .75, a $10 billion increase in imports will: A. Increase GDP by $40 billion, B. Decrease GDP by $40 billion, C. Increase GDP by $7.5 billion, D. Increase GDP by $2.6 billion.
I am having trouble understanding the MPC and the affect it has on GDP. I understand the higher the MPC multiplier, the better the GDP, but would that mean that a $10 billion increase is increased by 7.5 billion?
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