Government Spending Multiplier Calculation
If the marginal propensity to consume (MPC) is 0.65, what is the maximum possible change in real gross domestic product (GDP) resulting from a $30 billion increase in government spending?
A
Approximately $19.5 billion increase in real GDP.
B
Approximately $46.2 billion increase in real GDP.
C
Approximately $85.7 billion increase in real GDP.
D
Approximately $100 billion increase in real GDP.
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