In an economy, the marginal propensity to consume is 0.2, the marginal propensity to save is 0.3, the marginal propensity to tax is 0.3 and the marginal propensity to import is 0.2 at every income level. What is the most likely effect of a $1000m rise in government expenditure?
- AImport expenditure would increase by $200m.
- BImport expenditure would increase by $1000m.
- CTax revenues would increase by $75m.
- DTax revenues would increase by $375m.