Assume that the economy is initially at its equilibrium level of GDP. What will happen to the equilibrium level of GDP if:

planned investment decreases by 20,
government spending increases by 30, and
the MPC is 0.8

Select one:
a.

GDP will decrease by 50

b.

GDP will decrease by 10

c.

GDP will increase by 50

d.

There will be no change in GDP