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Marginal propensity to consume

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Reference no: EM131502421

Indicate whether the following statement is TRUE or FALSE and explain your answer: Suppose government purchases decrease by $10 billion, and there is no crowding-out effect. If aggregate demand decreases by $20 billion as a consequence of this, then our model predicts the marginal propensity to consume to be 0.7. 

Reference no: EM131502421

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