medium · CFA Level I econ
An analyst at Caldera Glass is evaluating a 100 million increase in government spending (G) intended to stimulate the economy. If the marginal propensity to consume (c) is 0.75 and the proportional tax rate (t) is 0.20, the resulting total increase in aggregate demand (AD) before any crowding out is closest to:
- 133 million
- 250 million
- 400 million
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