In a recession, the government raises spending on goods and services by $10 million, while tax rates stay the same. Why could the resulting rise in national income be smaller than $10 million?
- AIncreased government borrowing increases interest rates.
- BThe marginal propensity to consume is less than 1.
- CThe marginal propensity to import is greater than 0.
- DThere is no accelerator effect on investment.