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We know the answer is D but please explain how you arrive at this answer.

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We know the answer is D but please explain how you arrive at this answer.;Assume in a private closed economy that the equilibrium level of income is $380 and the MPS is 0.25. Now suppose government collects taxes of $50 and spends the entire amount. As a result;A);the equilibrium level of real income and the price level will both remain unchanged.;B);nominal wage rates will fall.;C);the equilibrium level of income will rise to $420.;D);the equilibrium level of income will rise to $430.

 

Paper#29562 | Written in 18-Jul-2015

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