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If the MPC is 3/5 then the multiplier is a. 4, so a $100 increase in government spending increases aggregate demand by $400. b. 1.5, so a $100 increase in government spending increases output by $150. c. 2.5, so a $100 increase in government spending increases aggregate demand by $250. d. 1.67, so a $100 increase in government spending increases output by $166.67.
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